Warner Bros. Discovery and Paramount Global are in preliminary talks to merge, according to several media reports.
The deal will see the owners of the HBO and CNN channels team up with the studio behind the Mission Impossible films and CBS News.
The deal would unite two of Hollywood’s “Big Five” studios, with a combined market value of Warner and Paramount reaching $38 billion (£30 billion).
Talks are believed to be still in the early stages and a deal may not happen.
Warner chief David Zaslav and Paramount boss Bob Bakish discussed a possible deal over lunch in New York this week, according to news site Axios.
Streaming shows and movies means traditional media companies have to invest quickly to compete with Netflix, Amazon Video and Apple TV.
Warner and Paramount will have to commit to deep cost cuts, as they seek to minimize billions of dollars in losses from their video streaming services.
As a result, their stock prices continue to trade well below the highs of the early days of streaming.
According to Axios, the chief executives discussed how each company’s main streaming services, Paramount Plus and Max (formerly HBO Max), could merge to better take on rivals Netflix and Disney Plus.
Paramount has been under immense pressure to find a buyer or strategic partner due to debt levels it has built up in recent years as it expands its streaming service.
Analysts say Warner Bros., the company behind this year’s blockbuster film Barbie, is in a slightly better financial position, thanks in part to some shrewd mergers.
Last year, AT&T and Discovery’s WarnerMedia units merged to become Warner Bros. Discovery, with a portfolio that includes Discovery Channel, Warner Bros. Entertainment, CNN, HBO, Cartoon Network, and franchises such as Batman and Harry Potter.
Paramount owns CBS, the BBC’s US counterpart.
Media reports suggest that more consolidation is on the horizon in the industry.
The dominance of Netflix and other big tech companies in the media world is undeniable – not only in terms of their financial performance but also through their vast portfolio of shows and subscriber numbers.
Netflix’s crackdown on account sharing in recent months has led to the creation of new accounts, mostly in the US, Canada and Europe, bringing its total number of subscribers to 247.2 million globally.
For comparison, Paramount Plus’ total subscribers reached 63.4 million and Warner Bros. Discovery’s 95 million as of November 2023.
Paramount and Warner Bros. declined to comment.