The Scoop
Paramount is racing to reassure Hollywood that its takeover of Warner Bros. Discovery, with its HBO streaming service, isn’t aimed at killing movie theaters.
“Theaters will continue to be an essential part of the moviemaking business and social fabric,” Paramount legal chief Makan Delrahim, a former Justice Department antitrust regulator, wrote to California attorney general Rob Bonta in a letter last week viewed by Semafor. “Paramount and WBD have every intention, and, importantly, incentive to keep filling California theaters (and theaters across the world) with a wide range of titles as we look to raise the standard for content production and distribution.”
The letter was sent before Bonta’s Monday press briefing, where he left the door open to filing a suit to try and kill the deal. “There are red flags everywhere for us,” Bonta said. “We’re looking at things like higher prices, lower wages, fewer jobs, less quality, less choice, less competition — the things that you look at when you’re looking at an antitrust case and a proposed merger.”
Bonta’s office didn’t immediately return a request for comment.
It shows that Paramount’s big challenge now — having won over skeptical shareholders, Warner’s skeptical board, and a skeptical White House — is convincing Hollywood talent that it means no harm. Creatives have good reason to be afraid: The combination of Disney and 21st Century Fox led to fewer movies hitting theaters, not more.
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Rohan’s view
Paramount is walking a fine line here. They successfully sold Warners’ board and shareholders on the argument that a combined WBD-Paramount would be best positioned to build a real competitor to Netflix and Hulu.
Now they’ve got the prize in their grasp — but have to play a different game to keep it, and build the tech-powered movie utopia Ellison envisions. Hollywood’s largely unionized workforces hold a lot of power here, and for now, Ellison needs them. (AI may change that, a bit.) State regulators can do what the Justice Department will not: scuttle the merger.
Building a third competitor to Netflix and Hulu is a good thing for everyone, but it’ll rest on Paramount successfully convincing the public that they’ll need old-school movie theaters to get there, and real guarantees that they won’t just jettison these promises once they’ve got it.
Know More
Paramount’s David Ellison and Delrahim have both argued that this deal is different. Delrahim noted that Disney had already begun paring back theatrical releases before it bought Fox. “Paramount, in contrast, has already increased its theatrical releases dramatically and has committed to distributing 30+ feature films following the WBD merger,” he wrote.
Paramount also noted that there were two big, non-studio drivers behind the Disney-Fox deal: getting more control over Hulu, the streaming platform that Disney now controls in full, and getting more intellectual property to turn into theme park rides. Paramount has neither of those concerns or pressures, Delrahim said.
Room for Disagreement
Critics of the deal have framed it as an existential issue: The Oligarchs Are Starting to Lose Their Grip On Power, the headline of a New York Times essay from actor Mark Ruffalo and a prominent economist read.
“David Ellison, the leader of Paramount, has said that if this merger is allowed, he will provide artists with more avenues for work. But we should know better than to trust promises by the ultrarich. After Disney bought Fox in 2019, the combined entity released far fewer movies than it did before the companies merged,” Ruffalo and the American Economic Liberties Project’s Matt Stoller wrote.