Warner Bros. Discovery Inc. held talks on a possible merger with Paramount Global, potentially combining two of the biggest media companies in the world, according to people with knowledge of the matter.

The talks are preliminary and may not lead to an agreement, said one of the people, who asked not to be identified because the discussions are at such an early stage.

David Zaslav, chief executive officer of Warner Bros. Discovery Inc., met with Bob Bakish, his counterpart at Paramount Global, on Tuesday in New York to discuss a possible deal, Axios reported earlier. He has also spoken with Paramount Chair Shari Redstone, whose family company owns a controlling stake in Paramount, the owner of CBS and other television properties.

A combination of the companies would unite famous Hollywood properties, including the Paramount and Warner Bros. film and TV studios, and put a number of pay-TV and broadcast stations, such as HBO and CBS, under a single roof.

A merger of the two large media companies would likely face intense scrutiny by federal regulators who have challenged numerous combinations under the Biden administration. According to Axios, Warner Bros. executives say they could complete such a merger because their company doesn’t own a broadcast network like Paramount’s CBS.

Both companies have struggled as consumers have canceled cable-TV subscriptions in favor of a new generation of streaming services. The streaming businesses are expensive to run, and haven’t made up for shrinking profits at traditional networks. Programming costs, especially for sports, have been escalating.

People familiar with Paramount’s thinking say the board has been more open to strategic alternatives, such as an alliance with another media giant, or even a sale to a private equity buyer or technology company.

Paramount has been selling noncore assets, such as its real estate and Simon & Schuster booking publishing business. Bloomberg News reported Wednesday that the company was once again holding talks about a sale of the Black Entertainment Television network, this time with a management-led group.

Paramount is controlled by the Redstone family, which owns a majority of the voting stock through National Amusements, a family holding company. Shari Redstone has also held discussions about a sale of her family’s stake in Paramount with film producer David Ellison and RedBird Capital Partners.

Warner Bros.’ Zaslav has shown a great appetite for deals, merging his Discovery cable networks with the Scripps channels and later acquiring Warner Media from AT&T Inc. in a $43 billion merger.

The latter deal included tax benefits that bar Warner Bros. from doing new acquisitions until April 2024, two years after the AT&T transaction was completed.

Shares of Paramount were down more than 1 per cent in extended trading. Warner Bros. was down almost 1.5 per cent.