Paramount Skydance’s Merger Plans
Paramount Skydance is advocating for its $110 billion merger with Warner Bros. Discovery, emphasizing that it aims to enhance competition against major streaming players like Amazon, Disney, and Netflix. The company believes this merger will infuse “new competitive” energy into the entertainment sector.
This information came to light in a letter dated May 7 from Paramount’s Chief Legal Officer, Makan Delrahim, addressed to California Attorney General Rob Bonta. This was apparently in response to some “misinformation” about market conditions that had been mentioned in recent public comments.
The initial letter was reportedly sent before a press conference held by Bonta on Monday, where he suggested that he might pursue a lawsuit aimed at preventing the merger from proceeding.
Bonta expressed concerns, stating, “There are red flags everywhere for us.” He mentioned that when evaluating antitrust issues and merger proposals, his focus is on factors like increased prices, reduced wages, fewer job opportunities, and diminished quality and choice in the market.
In his correspondence, Delrahim highlighted Paramount’s commitment to California’s movie theater audience and sought to underscore the pro-competitive advantages of the merger, even as it may undergo scrutiny for antitrust concerns at the state level.
In February, Paramount noted that the merger had cleared preliminary federal regulatory challenges.
This merger aims to consolidate Hollywood’s Paramount Pictures and Warner Bros., along with streaming platforms Paramount+ and HBO Max, as well as news organizations CNN and CBS.
Delrahim asserted that the collaboration between Paramount and WBD is intended to yield significant improvements for both theaters and their audiences. He reiterated CEO David Ellison’s commitment to producing at least 30 films annually under the renewed entity.
Delrahim further addressed the streaming landscape, revealing that Paramount+ and HBO Max currently lack the scale necessary to effectively compete with industry titans like Netflix, Disney+, and Amazon Prime Video.
He pointed out that Paramount makes up just 5.8% of U.S. streaming viewers, while Warner Bros. Discovery accounts for 5%, in contrast to the top three streamers, which together represent around 65% of the total U.S. streaming audience. According to December data from Nielsen, Netflix held a dominant 32.5%, followed by Disney at 16.7% and Amazon at 15.3%.
Delrahim also reassured that the post-merger dynamic with movie theater operators would likely remain unchanged and noted that the combined entities would represent only 25% of domestic box office revenues.
He concluded with a statement regarding the competitive landscape, saying that Paramount needs to vigorously seek out avenues to showcase its films, while also recognizing that various alternatives are available for theaters to consider.
