Aftermath of Netflix’s Warner Bros. Acquisition Sparks Unease in Hollywood

Following nearly three months of wrestling with the implications of Netflix’s purchase of Warner Bros., Hollywood is now pondering a different kind of, well, existential dilemma. What could really happen when two iconic studios merge?

One Paramount employee recounted the chaotic reactions in the Los Angeles office when the news first hit—shouts of disbelief and frustration, like an unvoiced scream echoing through the halls.

David Ellison is rapidly climbing the ranks towards mogul status. He’s reportedly on a path to own both Paramount and Warner Bros., two giants with roots deeply embedded in Hollywood’s history.

Ellison’s acquisition of Warner Bros. is notable not just for its scale; it’s something even the co-founder of Paramount, Adolf Zukor, couldn’t achieve.

While Ellison celebrates, the atmosphere among employees at both studios is fraught with uncertainty. The lengthy regulatory process might drag on into next year, and the looming threat of significant layoffs sends shivers down the spines of many, reminiscent of the fallout from Disney’s purchase of 20th Century Fox in 2019, which led to around 4,000 job losses, including many high-profile executives.

With the merger of Paramount and Warner Bros., there’s likely to be a far greater overlap in business operations compared to Netflix’s model. Unlike the streaming companies, which lack strong legacy television or theatrical distribution arms, Paramount and Warner essentially mirror each other in terms of business structure.

Even Warner Bros. recognizes that Paramount’s offer could lead to “further significant losses of employees and talent,” as they pointed to potential “synergies” translating to cuts and layoffs.

Both studios have global streaming services—Paramount+ and HBO Max—and major news divisions, including CNN and CBS News, along with cable networks like TNT, TBS, and HGTV, plus iconic brands like MTV and Nickelodeon. The film divisions are where the most overlap exists, representing the core identities of both companies.

Employees from Paramount and Warner Bros. have voiced their concerns, describing the situation as “disastrous” and hoping for voluntary buyouts to mitigate potential fallout. “It’s really tricky,” one employee remarked, noting confusion over the overlapping departments.

In his pursuit of Warner Bros., Ellison has gone back to his initial discussions with David Zaslav last September, vowing to ensure that the film aspects of both studios remain robust.

However, historical trends suggest that fewer buyers often lead to fewer film projects. For example, since Disney acquired 20th Century Studios, their output has significantly decreased.

One prominent agent labeled this merger as “the definition of antitrust” and expressed that neither the Netflix option nor the Paramount option could be considered favorable—a view echoed by many others in the industry. “It’s like choosing between a guillotine and a firing squad. For a century, mergers like this were prohibited,” the agent lamented, referencing Disney’s acquisition of Fox. “This is a setback for our business and a blow to Southern California.”