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Warner Bros. Discovery CEO David Zaslav met with Paramount Global CEO Bob Bakish on Tuesday in New York City to discuss a possible merger, Axios has learned from multiple sources.

Why it matters: The combination would create a news and entertainment behemoth that would likely trigger further industry consolidation.

• Zaslav also has spoken to Shari Redstone, who owns Paramount’s parent company, about a deal.
• WBD’s market value was around $29 billion as of Wednesday, while Paramount’s was just over $10 billion, so any merger would not be of equals.

Details: The meeting between Zaslav and Bakish, which sources say lasted several hours, took place at Paramount’s headquarters in Times Square.

• The duo discussed ways their companies could complement one another. For example, each company’s main streaming service — Paramount+ and Max — could merge to better rival Netflix and Disney+.
• It’s unclear whether WBD would buy Paramount Global or its parent company, National Amusements Inc. (NAI), but a source familiar with the situation says that both options are on the table.
• WBD is said to have hired bankers to explore the deal.

Between the lines: The deal could drive substantial synergies.

• WBD could use its international distribution footprint to boost Paramount’s franchises, while Paramount’s children’s programming assets could be essential to WBD’s long-term streaming ambitions.
• CBS News could be combined with CNN to create a global news powerhouse. CBS’ crime dramas, such as “NCIS” and “Criminal Minds,” could be combined with Investigation Discovery and TruTV.
• CBS Sports’ footprint could be combined with WBD’s. For example, CBS and WBD’s Turner Sports currently share TV rights for March Madness.

Be smart: Paramount is under enormous pressure to find a strategic partner or buyer, as it’s staring down a mountain of debt.

• The firm’s stock jumped 12% earlier this month following a report from Puck that Skydance Media and RedBird Capital Partners were eyeing a potential deal to buy a majority stake in NAI.
• NAI reached a deal with creditors to restructure some of its debt in September and previously slimmed down by selling Simon & Schuster. It’s also in talks to unload BET.

Behind the scenes: One source familiar with the discussions says the strategy being considered mirrors Zaslav’s blueprint for prior mergers.

• When merging with Scripps in 2018 and then WarnerMedia in 2022, Zaslav kept his core strategic team in place while retaining new creative talent leaders from the companies he acquired.
• Executives are confident that the deal would receive regulatory approval, despite D.C.’s active antitrust climate. Notably, Warner Bros. Discovery doesn’t own a broadcast network, which would clear an easier path than would a combination with a company like NBC owner Comcast.
• A tax provision used to merge WarnerMedia and Discovery expires next year, which would legally allow WBD to explore another deal.
• Zaslav told investors last month that the company’s cost-cutting measures and debt reduction now put it in a position “to allocate more capital toward growth opportunities.”

Paramount, WBD and NAI declined to comment.

The bottom line: Talks between WBD and Paramount are still early and may not ultimately result in a deal. But given the acceleration of cord-cutting and the growing encroachment of Big Tech on media, neither company can remain on the sidelines for long.

Disclosure: The author of this story is a paid contributor to CNN.

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