Shares of Paramount Global surged by nearly 10% on Friday, propelling entertainment stocks to new heights following reports from the Wall Street Journal about potential discussions between Paramount Global and Apple regarding bundled streaming platforms at a discounted rate.
There is a growing consensus that the market may be dealing with an overabundance of standalone services. The implementation of bundling could potentially reduce costs for consumers, decrease churn for providers, and overall align with the expectations of industry executives and Wall Street for more changes in the sector. Despite this, many also anticipate an increase in media company mergers and acquisitions to navigate through streaming deficits and the decline of linear television.
According to the WSJ report, discussions about bundling Paramount+ and Apple TV+ are in the early stages.
Verizon is already bundling Max and Netflix, and industry leaders such as David Zaslav of Warner Bros. Discovery and Bob Bakish of Paramount have expressed increasing support for third-party bundles. Internally, Disney has seen success with their offering of a Disney+, ESPN+, and Hulu bundle for some time.
Paramount has been forging numerous partnerships to drive streaming growth. These partnerships include collaborations with Walmart+ and Delta in the U.S., and internationally, deals with companies such as Sky in the U.K., Italy, and Germany, Canal+ in France, JCOM in Japan, CJ Media in Korea, and a recent partnership with local cable provider Cosmote in Greece. During Paramount’s last earnings call, Bakish emphasized the importance of partnerships as a significant contributor to their momentum and hinted at a new phase of expansion just beginning.
The company declined to comment on the report and Apple representatives were not immediately available.
Following the news, Paramount shares experienced a significant 9.8% increase, closing at $15.78, while Apple’s stock remained unchanged. It’s worth noting that the streaming service, part of Apple’s rapidly growing services sector, is still only a small portion of its overall business. The Apple TV portal, which allows the company to collect substantial fees from every streaming subscription generated there, is a much larger and more profitable arena than Apple TV+.
In a CNBC interview, media analyst Barton Crockett of Rosenblatt Securities mentioned, “Apple has tons of leverage. Apple’s a different bird, so we’ll see what they [Paramount] are able to negotiate with Apple. In the kind of bigger picture, it’s very clear to me that over time streaming needs to migrate towards these big tech platforms. And I thought breakups, and sales of libraries, and sales of sports assets is the way that’s going to happen. Certainly, these partnerships, these kind of synthetic bundlings, may be a kind of partial step.” He added, “But it’s also not clear to me that if Apple is going in that direction, that Paramount will be the only participant.”
Despite the ambiguity surrounding the potential partnership, the innovative strategies and changes in the streaming landscape are sure to keep both the industry and consumers guessing about what’s next.
