Why Hollywood’s Merger Mania Will Leave a Host of Theater Chains and Entertainment Companies in the Dust (Video)

TheGrill 2018: “The theatrical distribution business is bound for failure,” says attorney Sky Moore

The entertainment industry’s multibillion-dollar scramble for consolidation will end with some companies bigger and more relevant, and others dead, said panelists discussing the future of entertainment Monday.

It’s going to take massive investments for companies to adapt to the digital world, said Sky Moore, a partner at the law firm Greenberg Glusker. He was among the panelists at  TheWrap’s annual media and technology conference TheGrill at the SLS Hotel in Beverly Hills.

The theatrical business is the most at risk, Moore said.

“Three years from now, the theater business is two-tiered, it’s top is $100 million plus budget films. It’s a hightened experience — it’s almost virtual reality. Below that, the theater business is dead and a lot of companies are out of business, a lot of theater chains are out of business,” said Moore.

The Walt Disney Co., for example, is spending $71.3 billion to buy most of 21st Century Fox’s entertainment assets as it prepares to set up its streaming platform to take on Netflix. And AT&T completed its $85.4 billion of Time Warner.

Not everyone has that level of capital. “There’s going to be a big shake-up in a couple of years,” Moore said. “I think there’s going to be a lot of bankruptcies.”

Alissa Miller, a partner at the law firm Akin Gump, asked members of the audience to raise their hands if they subscribe to Netflix, Hulu and Amazon Prime. Nearly everyone raised a hand.

“We’re living in a digital world,” Miller said. “People of my generation and below don’t have much of an interest in going to theaters.”

In order to diversify and become digital players on top of shrinking legacy businesses, the big players are getting bigger. Moore said smaller players such as Sony, Lionsgate and STX Entertainment are left to fend for themselves, either becoming attractive acquisition targets or going under.

But the lost jobs could mean new opportunities.

“The Fox-Disney merger is interesting because the folks losing their jobs are top-level people who are still killing it,” said Jason Hirschhorn, CEO and chief curator at REDEF Group. “Literally I’d be outside the Disney lot right now with a lobster bib looking at who’s out.”

Twentieth Century Fox CEO Stacey Snider, who is likely out following the close of the Disney deal, is one example. Hirschhorn said if he were working at a streamer like Hulu, he’d scramble to hire her.

FTI Consulting senior advisor Roy Salter said he’d suggest Snider take her experience running Fox, and hire other talented execs, to create a new company that would have no trouble getting backing.

“There’s never been more opportunity in the world than right now,” Salter said. “There’s so much money to go around.”