It wouldn’t be the holiday season in Hollywood without a little deal chatter. This time, it’s Warner Bros. Discovery and Paramount Global that have set tongues wagging. Leaders for the two media giants met this week, people familiar with the talks said, to discuss a potential merger that would create an entertainment, news, and sports titan.

Ever since the 2021 merger of WarnerMedia and Discovery created the debt-ridden Warner Bros. Discovery, media observers have speculated that the company would be a prime candidate to combine with—or even sell to—a rival. And Shari Redstone essentially hung a “For Sale” sign on Paramount’s front door after news leaked that, according to Puck’s sources, she was working with bankers to explore a deal with Skydance Media, the David Ellison–run company behind the recent Mission: Impossible films.

The timing of the late December deal talks, which Axios first reported took place Tuesday at Paramount’s Times Square Headquarters, is notable. Warners CEO David Zaslav met with Paramount CEO Bob Bakish for several hours and discussed, among other things, a potential merger. The talks kick-start what will be a busy 2024 in Hollywood as every major media company seeks to shore up their businesses amid the dual threat of a collapsing cable business and an increasingly powerful tech incursion.

There are a whole host of reasons that a deal between Warners and Paramount would make sense. The combination of their streaming services, Max and Paramount+, could give them the scale needed to take on Netflix. They could also merge their cable television portfolio—including channels like MTV, Nickelodeon, HGTV, and Food Network—to negotiate better terms with carriers like Comcast and Charter. Their sports businesses are also complementary, as are their CBS and CNN news operations.

Each business also brings a piece of the puzzle that the other is lacking. Warner Bros. Discovery could take advantage of aligning with a broadcast network like CBS, which would also give it a foothold in the coveted NFL sports rights space. And Paramount would benefit from Warners’s robust international operations.

But though Zaslav has spoken with Redstone about a potential merger, the people familiar said, there are no guarantees a deal will happen. Any combination of such large media companies would presumably face regulatory scrutiny, for one. And because of a complicated tax law, Warner Bros. Discovery would likely take a big hit on any deal that occurs before the two-year anniversary of its earlier merger, The New York Times reports.

Investors don’t seem too excited about the potential deal, likely because it would saddle the combined company with significant debt. Warners’s shares closed Wednesday, December 20, down nearly 6%, while Paramount shares were down around 2%. In the early afternoon on Thursday, Warners’s shares were trading down another 4%, while Paramount’s were down 1%. The talks could also shake the trees on other potential partners for both companies. CNBC reports, for instance, that NBCUniversal could be drawn into the fray as a jealous suitor.

Two years after taking the helm at Warner Bros. Discovery, Zaslav has aggressively paid down debt and turned the streaming division profitable, moves that have made it possible for the company to go hunting for deals that could benefit its overall business. But to get the company to that point he has made some unpopular decisions and infuriated workers at many levels of the industry, including conducting widespread layoffs and canning several highly anticipated upcoming projects, all while doing what some perceived as tone-deaf elbow-rubbing with stars.

A deal between Warner Bros. Discovery and Paramount would help both companies weather what could be a tough period of transition for Hollywood. But it would also almost certainly lead to more layoffs and more contraction in an industry already broken down by media moves of the past few years.