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Paramount Skydance has emerged as the winner in a months-long battle to acquire Warner Bros Discovery.Jae C. Hong/The Associated Press
Upon learning the news late Thursday that Paramount Skydance had triumphed over Netflix in its months-long tussle to acquire Warner Bros. Discovery, in a deal valued at US$31 a share, I couldn’t help but recall the 2004 sci-fi thriller Alien vs. Predator.
Not because that film’s ungainly and unnecessary mash-up of two distinct Hollywood franchises mirrors the messy, needless merging of two iconic Hollywood studios. And not because there is something distinctly extraterrestrial about the ambitions of Paramount’s chief executive David Ellison, a semi-successful movie producer who just so happens to be the son of one of the world’s richest men and is, as of now, the leader of an unparalleled media empire. No, what came to mind in this final, distressing chapter in the Paramount/Netflix/WBD melee was the brilliant line of marketing copy that trumpeted Alien vs. Predator: “Whoever Wins … We Lose.”
Netflix backs away from offer to buy Warner Bros
Make no mistake: If Netflix had successfully swallowed WBD, as originally announced last year, the deal would have led to the decimation of movie theatres, thanks to the streaming giant’s long-held antagonism toward theatrical exhibition. Culturally invaluable WBD franchises would have been wrung dry by the Netflix machine – everything from Game of Thrones to Batman to Lord of the Rings to The Sopranos – and the once-expansive competitive atmosphere that breeds creativity would be squeezed that much further. It would be a disaster for audiences and artists.
Yet if the Netflix deal felt like a five-alarm fire for the entertainment industry, then the Paramount deal, which still needs regulatory approval, resembles a full-blown Hollywood inferno.
Opinion: Why the Netflix, Warner Bros. deal is a disaster for movie theatres, filmmakers and audiences
Again, we have the head-spinning bundling of brands for the purposes of wholesale exploitation. Transformers, Star Trek, SpongeBob SquarePants, Sonic the Hedgehog, Paw Patrol, Ethan Hunt, and the extended Corleone family will now live under the same corporate umbrella as Harry Potter, Superman, Looney Tunes, Friends, The Big Bang Theory, and almost the entirety of Stanley Kubrick’s canon. It will be one-stop shopping for a huge swath of consumers, which means far less competition in the streaming space, allowing Paramount to operate with near-impunity. As U.S. Senator Elizabeth Warren rightly noted Thursday, the merger is an “antitrust disaster threatening higher prices and fewer choices.”
While the Netflix deal would have dealt a near-fatal blow to movie theatres and sparked devastating job losses, Paramount will almost certainly have to make deep cuts in its newly enlarged company, eliminating what the company’s chief operating officer Andy Gordon last year called “duplicative operations across all aspects of the business.” While it remains to be seen whether this will translate to job cuts totalling US$6-billion in cost savings, as Netflix’s chief global affairs officer Clete Willems predicted last month, it is almost guaranteed that the deal will further hollow out an already devastated sector.
It is not only the entertainment industry that is under threat here, either. With WBD now under its control, the Ellison family – including David but also his father Larry, the executive chair of Oracle who according to Forbes is worth approximately US$192-billion – will control two movie studios, two major streaming services in Paramount+ and HBO Max (the latter of which will almost certainly be swallowed up by the former), two television production giants (CBS and Warner Bros. TV Group), and two major news operations.
If you like what Bari Weiss has done for CBS News since David Ellison installed the right-tilting firebrand there as editor-in-chief a few months ago – a move that has resulted in an escalating series of tragi-comic incidents that cannot help but underline the Ellisons’ Trump-friendly sentiments – then just wait until CNN gets pulled into her orbit.
Speaking of Trump, it feels like it is no coincidence that the merger news comes two days after the junior Ellison was invited to the U.S. President’s State of the Union address at the invitation of Republican Senator Lindsey Graham – and just a few days after Trump demanded that Netflix boot Susan Rice, a former Obama administration official, from its board of directors or “pay the consequences.”
You don’t have to be a conspiracy theorist to imagine which company more closely aligns with Trump’s sensibilities. Add in Larry Ellison’s stake in TikTok via a consortium led by Oracle, and Paramount now has a near-stranglehold on how Americans will consume their news for the foreseeable future.
Warner Bros. gets higher takeover offer from Paramount in fight for studio
To some in Hollywood, Paramount seemed like the lesser of two evils when it came to buying WBD – after all, its 103-year-old studio has a deep history with theatrical exhibition, and David Ellison has pledged that his newly combined entity would release 30 theatrical movies annually, which is about what Paramount and WBD delivered collectively each year.
But that promise was also coming from a CEO who has only been in charge of a movie studio for about five months. Will he be able to successfully manage two? Ellison has long contended that Paramount needs the ammunition of another legacy media empire like WBD to compete in this new era of YouTube and Netflix, where the war for eyeballs is one waged on a global playing field. But who is to say that this plan – which will leave Paramount with more than US$90-billion in debt – won’t crash and burn for the Ellisons, taking a huge chunk of Hollywood along with them?
And these pressure points underline a bizarrely under-asked question: Why did the industry seem to simply accept that Warner Bros. had to be sold in the first place? The company’s movie division just delivered a banner year, pumping out everything from gigantic box-office hits (Minecraft, Weapons, The Conjuring: Last Rites) to the most critically acclaimed, Oscar-nominated films of the year (Sinners, One Battle After Another). HBO continues to produce the highest-quality and highest-rated television in an increasingly cutthroat landscape. Yes, WBD is saddled with a flailing cable-TV business and a legacy of debt created by previous, nearly-as-bad mergers. But it wasn’t exactly a distressed property on the verge of evaporating. This was not a fire sale, despite the flames that the deal will ignite across the industry.
In his note to investors Thursday, WBD chief executive David Zaslav – who only two months ago posed for celebratory photos alongside Netflix co-CEOs Ted Sarandos and Greg Peters as the trio toured Warner’s storied Hollywood lot – said that the merger would create “tremendous value” for shareholders. Unremarked upon were reports that, under Zaslav’s contract, he stands to make upward of US$500-million on the deal.
And so one Hollywood titan walks away from the chaos with a king’s ransom. Another, Ellison, gets the kingdom that he feels he needs, if not the one he deserves. And Netflix, still a giant in its own right, gets US$2.8-billion from WBD (via Paramount), the breakup fee that was agreed upon in case the initial deal went south. Whoever wins … we lose.
