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ACCORDING TO LIZ - Toasts were raised at Paramount Skydance headquarters late last month when the media conglomerate nosed Netflix out of the race to acquire Warner Brothers Discovery. For a cool $110 billion.
By increasing its bid by $1 a share, WBD board members bowed to their offer. Netflix, which supposedly had sealed a deal with WBD in December, had the option to match. But cut bait, issuing a statement saying that the deal was “no longer financially attractive” at such a cost.
On a call with analysts and investors that Monday, Paramount Skydance’s David Ellison, stated the company was “absolutely confident” that the merger will expeditiously thread through the regulatory hoops in the U.S. and abroad: “We’ve been engaging with regulators around the world and the combination does not come close to hitting any of the metrics that would be problematic.”
However, California Attorney General Rob Bonta warned that Paramount shouldn’t celebrate so soon; that the bid was “not a done deal.”
And last Thursday, his office launched an investigation into the merger promising a thorough review of the proposed takeover.
“We need to bring moviemaking back to our shores, increase production, and invest in our workforce. For the sake of America’s moviemaking workforce and movie lovers everywhere, I will continue to push all parties to do their part.”
Tracking Senator Adam Schiff’s statement the same day: “The merger of two of Hollywood’s biggest studios must be subject to the highest levels of scrutiny, free from White House political influence, to determine its impact on American jobs, freedom of speech, and the future of one of our nation’s greatest exports.”
The 30th district’s Rep. Laura Friedman – film producer, previous mayor of Glendale, prior member of the California Assembly who stepped into Schiff’s shoes when he became Senator – issued an equally strong statement demanding concrete commitments be in place protecting Hollywood jobs before any approval.
“For us, Hollywood isn’t just an internationally recognized name, it’s the powerhouse behind our local economy that supports tens of thousands of jobs. From the beginning I’ve said that any deal needs to bring production and jobs back to the United States and Hollywood and lower costs for consumers.”
Also last week, the Teamsters filed a report with the DOJ outlining concerns for their worker if the merger goes through.
Which pits the Teamster head honcho and Republican fave Sean O’Brien against Lori Chavez-DeRemer, Trump’s Secretary of Labor, and Trump’s billionaire buddy Larry Ellison. O’Brien demonstrated loyalty to his constituents, condemning the merger as threatening the “livelihoods of the very workers who built these studios into industry giants.”
O’Brien plowed on: “[W]hat happens when corporations consolidate power [is that] jobs disappear, production leaves American communities, and workers pay the price. The DOJ has a responsibility to stop deals that eliminate competition and harm working families. Unless Paramount and Warner Bros. can guarantee enforceable protections for domestic production and labor standards, this merger can’t be allowed to move forward.”
Skydance foresees at least $6 billion in redundancies with massive layoffs expected when the deal closes including decisive reduction of film production, gutting studio jobs and industry support positions across Hollywood.
Even if the numbers of movies for Paramount and Warner Brothers. remain the same – which industry insiders view as doubtful – their scope would be greatly reduced to cover almost $80 billion in debt the Ellison team – primarily David’s deep-pocket dad Larry – is assuming, significantly impacting the numbers of hires.
Trump tends to swing towards whomever twists his ear the hardest and last, so the Teamsters ganging up with the Writers Guild to oppose the deal may reduce the Ellisons’ clout.
The Writers Guild, both East and West, issued a statement last October saying any merger involving Warner Brothers would be catastrophic: “Merger after merger in the media industry has harmed workers, diminished competition and free speech, and wasted hundreds of billions of dollars better invested in organic growth. Combining Warner Bros. with Paramount or another major studio or streamer would be a disaster for writers, for consumers, and for competition.”
Last week it strongly reiterated its opposition to the merger, stating it “must be blocked” because “the loss of competition would be a disaster for writers, consumers and the entire entertainment industry.”
Worry has been bipartisan with 11 Republican state attorneys general banding together against the initial deal “to express our concerns that the proposed merger between Netflix and WBD will likely result in undue market concentration that stifles competition and therefore creates higher prices, lower reliability, and less innovation for one of America’s major industries – all to the detriment of American consumers.”
With the Wall Street focus on money, money, money, fewer and fewer creative movies get off the ground with the bean counters hedging their bets by funding projects that have name recognition with the target audiences that can further be sliced and diced into eye-grabbing episodes and smash-hit streamers, award-winning music, and more.
Giving existing intellectual properties – feature franchises, TV shows with high ratings, comic books, Japanese manga – the foot up on getting green-lit no matter how trite the story, how weak the plot. And cutting creative newcomers from the field.
Paramount filed for Justice Department approval in December, starting the regulatory review clock even though the vote to accept the offer won’t happen until March 20. Its board is calling it “technically superior” meaning that shareholders stand to profit handsomely no matter the consequences for the consumer.
Consumers will certainly face fewer types of stories but, while crucially important to American culture, that could be considered ephemeral in a court of law.
A key deadline to raise concerns has already passed with the DOJ turning a blind eye, and Paramount hopes to finalize the merger by the end of September.
Paramount’s Chief Legal Officer, Makan Delrahim, self-servingly claims the deal “a huge win for the creative community” and that it will result in “more job opportunities.” Not sure whose Kool-Aid he’s been drinking.
He admitted that in an age of consolidation Paramount was forced into the purchase to survive in an industry where technology conglomerates now dwarfed other players.
Paramount must win the support of WBD shareholders, then gain regulatory approvals from the Justice Department, state attorney generals, and overseas governments.
But any opposition to the merger by U.K. and European Commission antitrust officials may be muted by unwillingness to take on Trump on yet another front.
As Rohit Chopra, former director of the Consumer Financial Protection Bureau and advisor to the Progressive State Leaders Committee on antitrust enforcement says: “The federal government is just not enforcing the law. Our states are really the last line of defense.”
Democratic leaders across the nation, outraged by the Trump DOJ’s ongoing blind eye to antitrust violations and further corporate consolidation have little power to demand enforcement of existing regulations. A coalition of states’ attorneys-general suing to block the merger may provide the surest path forward to eviscerating the merger.
Former FTC commissioner Alvaro Bedoya feels that “There appears to be an even more compelling case that a whole lot of people are going to be put out of work. So I think a state attorney general looking at the labor market effects is going to have something to work with.”
Bonta has taken the lead saying it’s now up to California and sister states to protect consumers’ interests. In the same way as 30-odd state attorneys general plan fight on against Live Nation and Ticketmaster after the puppet-master manipulated DOJ settled for a fine but utterly failed to address the monopoly matter at its core.
Competition with multiple and ever-changing players has driven the growth of entertainment industry for decades.
Senators Elizabeth Warren and Richard Blumenthal wrote to Pam Bondi “Federal antitrust law is designed to prevent mergers that would create massive conglomerates like this, which are bad for our economy and for Americans.”
President Trump’s regular bashing of mainstream media has been a deterrent to outspoken thinking but with the folding of multiple production platforms into a few monopolies beholden to his pleasure, a major bastion of free speech and broad dissemination of ideas to all Americans faces something worse than the McCarthy Hollywood blacklists.
Sony Pictures head Tom Rothman’s excellent opinion piece in the New York Times a week ago points out that, although the industry is going through some tumultuous times, the instant gratification by pushing for short-term profits has become self-defeating because what is needed are more bona fide original hits, not regurgitated and dumbed-down Pablum for the masses.
Robert Redford’s quote under his ‘In Memoriam’ photo at the Oscar’s read: “The glory of art is that it can not only survive change, it can lead it.”
Filmmaking must remain creative, retain its original artistry enabling a cohesive sense of American community, and not become just some fading Wall Street commodity to be kicked to the side when it is no longer profitable.
