Warner Bros Discovery and Paramount Global are reportedly in early stage talks about a merger that could bring two of the world’s largest media firms under one roof with a combined market value of $38bn (£30bn). It is understood that Warner Bros’ chief executive, David Zaslav, discussed a potential merger – that could bring together HBO and CNN with CBS News and the hit Mission: Impossible films – while having lunch with his counterpart, Bob Bakish, at Paramount’s offices in New York this week. A tie-up could also bolster their main streaming services, Paramount+ and Max, helping them compete with streaming rivals such as Netflix and Disney+ that have put traditional media houses under financial pressure. It could prompt further consolidation across the industry, as firms work harder to hook subscribers who have been cutting their spending owing. to cost of living pressures. The Warner Bros chief also spoke to Paramount’s controlling shareholder, the billionaire media mogul Shari Redstone, about the prospective deal, and has hired bankers to explore a tie-up, according to the US media outlet Axios, which first reported the news. Talks are said to be in the early stages, making it uncertain whether any deal will be pursued. Any tie-up would not be a merger of equals, given that Paramount, which is now valued at $10bn, would possibly join forces with Warner Bros, which is worth about $28bn. Both firms are under pressure to reduce their debts, and both have committed to deep cost cuts to minimise losses, particularly from their video streaming services. Warner Bros’ debts have been estimated at about $43bn by analysts at Bernstein, representing more than four times its adjusted earnings. Paramount has built up debts equal to six times its adjusted earnings, about $14bn. However, Warner Bros will also have to hold off taking any formal steps until April, due to tax rules that barred it from doing any further deals for two years after its tie-up with Discovery in 2022. Warner Bros is the result of a merger with AT&T’s WarnerMedia unit and Discovery, which brought together the Discovery Channel, CNN, HBO and the Cartoon Network, as well as the Harry Potter and Batman films.