Most people are starting to exhale now that it looks like the Paramount-Skydance sale saga is finally behind us. Those who aren’t know there’s a slim chance as part of a 45-day “go shop” window where someone else can make a bid and Shari Redstone can still change her mind and ruin everyone’s summer.
But even if Edgar Bronfman Jr. or the “Baby Geniuses” producer do come out of the woodwork, Hollywood still dodged a serious bullet: industry consolidation.
Deadline late Thursday reported that Sony and Apollo will not be a rival party making a counter offer during the go shop window. Their offer of $26 billion for the bulk of Paramount was the only other formal offer on the table. Now that’s off the table, and everyone should be able to breathe a little easy.
Under Skydance‘s merger, things are no doubt going to change. CEO David Ellison is mapping out $2 billion worth of additional cuts, an overhaul of Paramount+, the potential sell off of other assets, and big plans for the company’s animation department.
But the alternative? Had a rival studio like Sony absorbed Paramount, it would’ve been a much different story. Thousands could be laid off with as a result of huge redundancies between two major studios, legacy brands like CBS could’ve been sold off or stripped for parts because a foreign company can’t own a national broadcast network, and far fewer movies and shows could be made as a result of a giant player being taken out of the market.
“Skydance is a significant player, don’t get me wrong, but having Paramount out is a much bigger jolt to the business than Skydance being absorbed by Paramount,” one industry source told IndieWire. “[The industry] will thrive when there are more players, more financiers, distributors. It’s better for the marketplace: less power, less control. Hopefully one day independents will make a comeback too, but right now, you have this oligopoly.”
The closest comp to a would-be Sony-Paramount buyout happened in 2019, when Disney finally closed its deal to buy 20th Century Fox. Then in 2022, Amazon absorbed MGM. Warner Bros. merged with Discovery a few months later. Suddenly in the span of 36 months, Fox and MGM, two Hollywood studios that had been around since the Golden Age, effectively became labels inside larger conglomerates.
Direct casualties of this media consolidation include “Coyote vs. Acme” and “Batgirl,” movies greenlit by the previous regime that turned into tax write offs to slightly help WBD reduce the near-$50 billion in debt caused by its creation. A movie like “Road House” was downgraded from an MGM theatrical release to streaming-only on Amazon Prime Video. And Fox’s film output, including that of indie banner Searchlight, has dipped under Disney. Hell, even HBO Max lost the “HBO.”
Disney-Fox, Amazon-MGM, and Warner Bros. Discovery sent a message to the industry: Size is now the only way to compete. It’s the reason Lionsgate split from Starz, why Zaslav and other execs had cups of coffee with Bob Bakish before he was fired from Paramount, and why analysts have for years wondered when Apple or Comcast or Netflix will cut a big check to bulk up. Any one has the potential to send shockwaves through the industry.
At the height of the writers strike, the WGA called for the end of such media consolidation. In August, the guild asked the Department of Justice to proactively investigate antitrust violations among Netflix, Disney, and Amazon. The WGA argued the companies’ extreme push toward vertical integration is anti-competitive, and that it hurts wages for creators, gives studios more leverage over writers in individual negotiations, and worsens working conditions because of the scale and need to cut corners.
“[It’s] a model built for and dependent on restricting the availability of independent content from competing producers, underpaying creators, and, above all, making future consolidation the name of the industry game,” the WGA report from August reads. “Each has demonstrated that it will abuse a position of dominance to disadvantage competing producers and streaming services, reduce output, creativity, and choice in content, and push down wages for creative workers.”
Beyond the appeal of having a movie-studio juggernaut, a Sony-Paramount merger didn’t make a whole lot of sense. Sony entered and exited the streaming wars early on, already owns a studio lot, and fortunately has very few ties to linear TV. Why the hell would it want the unprofitable Paramount+, let alone dying cable channels like MTV, VH1, Nickelodeon, and others?
Most likely, it wouldn’t. The value for Sony is in adding Paramount’s library, and the industry source said a Sony acquisition would have been a “bloodletting” for jobs, with many of them unlikely to be absorbed elsewhere.
Granted, there’s no guarantee the Justice Department would’ve even allowed such a massive merger. It may yet balk at Skydance merging with Paramount. Such a scenario would create even more chaos around town.
Until then, we’re all looking at you, Barry Diller.
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