After driving the price tag up to chase Netflix away, David Ellison pulled off a coup in late February with a $111 billion deal for Paramount to devour Warner Bros. Discovery. Until then, criticism of the sale was on parallel tracks. Would the historic studio be better off in the hands of a streaming video giant that didn’t care about movie theaters or in the clutches of an heir to a tech billionaire with ambitions to remake the entertainment industry in the TikTok era?
With Ellison claiming victory, all of those whispers about the cons of Paramount became the sole focus. Would it be cutting a lot more jobs than Netflix? Could a combined studio actually live up to its 30 movies a year pledge? How does HBO stay HBO in a cost-cutting atmosphere? Can CBS News and CNN live under the same roof without political interference? How close, really, are the Ellisons to Donald Trump and did the President get Sarandos to back off? Can the entertainment industry really afford to lose a major studio bidder for projects in an already lean market for buyers?
This month has seen increased mobilization in Hollywood against the deal. Movie theater owners are rallying against it at CinemaCon in Vegas, Democratic congressmembers are using up all their formal stationary with strongly worded letters to Paramount’s policy team, and grassroots groups like the one led by Jane Fonda are rallying A-list names to put pen to paper to show solidarity against a deal. Would Ted Sarandos’ team have had it any easier? Two Hollywood Reporter editors have diverging views.
ERIK HAYDEN: The open letter does seem like it marks a new escalation in opposition to Paramount’s takeover of Warner Bros. and that the drumbeat has steadily been increasing from what feels like all corners of the industry aside from the dealmakers who work on this type of M&A. Alex, was this inevitable for any buyer?
ALEX WEPRIN: I think some level of pushback would have been inevitable for (almost) any buyer, but I think there were a handful of factors here that are likely making the pushback against Paramount’s deal louder, at least in terms of volume if not efficacy. The three big things I’m thinking about are:
This deal will merge two of the historic Hollywood film studios into one company, and previous mergers have not resulted in more work or better outcomes for the business. And it will merge two big TV production enterprises together. Ditto there. Plus everyone expects significant layoffs, which could mean longtime staff with talent relationships lose their jobs without any obvious landing pad.
I found very few people in Hollywood who believe that Paramount will stick to many of their promises (30 films a year, continuing to be a buyer and seller of TV, etc). Maybe they will! But there is real skepticism there, whereas aside from Netflix’s theatrical commitment (which the industry also didn’t buy), I think people understood their argument.
And then there’s the politics of it. Colbert’s ill-timed cancellation days before the FCC approved the Paramount deal, the company throwing a party honoring President Trump days before the White House Correspondents Dinner, comments from Secretary Pete Hegseth about how the sooner David Ellison takes over CNN the better. It all aligns to irk an industry that is decidedly left of center.
ERIK HAYDEN: Let’s take the first one first. Under the Netflix offer, Warner Bros. still would’ve been absorbed into the streaming giant even if Discovery spun away. Ted Sarandos had been meeting with White House officials, and Trump, and was trying to navigate a very narrow pathway to avoid drawing his ire. Ultimately, the attack line from Republicans in Congress was that Warner Bros. couldn’t be sold because Netflix was too progressive-leaning, in their view. Netflix would loom too large in the marketplace of ideas, was their narrative, vs. the nuts and bolts talk about Hollywood industry jobs. In some ways, it’s the inverse of what we’re seeing now with some Democratic senators and the Ellisons, no?
ALEX WEPRIN: I think they were raising hay about Netflix’s perceived politics, but in practice the arguments against it legally were about the biggest streaming service acquiring the third-biggest (a totally legitimate and dare I say strong antitrust argument). I agree it is somewhat inverted now, but I think that is because the opponents realize that the antitrust case is the only one that really matters. While the politics may bother them, it wont stop the deal. The consolidation argument at least has an outside shot.
ERIK HAYDEN: Leaving aside the inevitability of the deal (or not), would there be as many boldface names signing an letter if Netflix won the bid? I tend to think so. Even if some of the signees (call it maybe the “Mark Ruffalo wing” of Hollywood) were maybe quicker to lend their voice given that Ellison has aligned himself publicly with political allies like Sen. Lindsay Graham and attended the State of the Union address that Trump gave this year.
ALEX WEPRIN: I have no doubt that there would be open letters signed by boldface names (James Cameron wrote one trashing the Netflix deal!), but I am skeptical that the list would be as long or starry as this one. Any consolidation would generate heat, but I do think the sheer scale of these two film and TV studios would generate more than than Netflix. And I do think politics played a role, as I alluded to earlier. When David Ellison met with Warner brass on their Burbank lot, he was asked about CNN. That isn’t a jobs question, that was a politics question. Yet politics never stopped Rupert Murdoch from getting Hollywood to work with him. Whatever happens, I would expect every signer to be happy to work with Paramount or Warner Bros.
ERIK HAYDEN: To your second point, about whether Paramount is being straight with the industry about all the movies it can produce and whether it can actually create new jobs (especially in Los Angeles), I think what’s interesting is the suggestion that the Ellisons are not showing their cards yet at all about a plan. There’s a standard “to be fair” line here about Ellison that he’s limited in what he can say since the deal hasn’t closed.
ALEX WEPRIN: And that is true. My suspicion is that ultimately there will be some sort of binding commitments, from the E.U., U.K., and perhaps even the U.S., promising some level of production, though the details will matter there (how much? how long? etc). But it is perfectly reasonable for Hollywood to be suspicious, given recent history (Disney-Fox), the high debt load that the company will be taking on, and financial commitments made to others like the NFL and UFC.
ERIK HAYDEN: Lets say its April in Alternate Earth where Ted Sarandos has closed an agreement to buy Warner Bros. Unlike Ellison, Sarandos has already appeared before the Senate (as he actually did in early February when he spoke broadly about viewers being 40 percent conservative, 40 percent liberal and 20 percent “don’t know”). But my guess is that political opposition may have been even more lined up at this point against Netflix than where its at against Paramount given Republicans hold the levers of power. Whether that translates to grassroots energy…
ALEX WEPRIN: Political power, sure, but I’m not convinced that elected officials would have been as eager to make the noise that we are hearing now. That’s the issue, signal vs. noise. There are perfectly legitimate antitrust arguments against both deals, and rational arguments in favor of both. With Hollywood reluctant to weigh in on politics at places like the Oscars this seems to be a place where the industry is coalescing.
ERIK HAYDEN: The noise is getting louder, even if it’s just that. Damon Lindelof expresses weary resignation that “Me opposing an inevitable merger would be pointless and signing a letter that will evaporate into the shitstorm of an unrelenting news cycle would be even more pointless” — yet signs the open letter.
