Paramount Skydance is again defending its merger with Warner Bros. Discover in a new letter to the California Attorney General, citing theatrical benefits.
AG Rob Bonta received a letter from Paramount’s chief legal officer Makan Delrahim, arguing that the merger would be a boon for theatrical distribution, as concerns continue to rise that the takeover would reduce theatrical releases.
“Paramount’s proposed merger with WBD will help drive meaningful improvements for movie theaters and their audiences,” Delrahim said. “To compete more effectively with Netflix, and others leading services, a combined Paramount-WBD will need to capture audiences’ attention in fresh ways, and that includes broadening theatrical distribution to tap into the magic of the moviegoing experience and create momentum behind films before they reach streaming services.”
He added: “The combined Paramount and WBD thus will have every incentive to get more films into wider distribution on more movie theater screens—it is how it will compete for audiences across the entertainment ecosystem.”
Paramount Skydance CEO David Ellison had previously committed to releasing 30 films annually following the merger and ensured a 45-day theatrical window minimum for each and every one of those releases.
“That pledge makes sense: theaters are a core part of the combined firm’s strategy to drive engagement both on and off the big screen,” Delrahim said.
When it came to streaming services, the chief legal officer’s letter pointed out that even with Paramount+ and HBO Max coming together, it would allow the company to merely compete at scale with other streamers like Netflix and Prime Video.
“Both firms’ platforms lack the scale to compete effectively against the leading SVODs: Paramount represents only 5.8% of US SVOD viewership, and WBD 5.0%.9. By comparison, the top three streaming subscription platforms together capture 65% of all US SVOD viewers—Netflix with 32.5%, Disney 16.7%, and Amazon 15.3%.10. Absent something transformative, neither party is positioned to grow to a scale where they would catch up to the leading streamers.”
The letter continued: “Combining Paramount and WBD creates a new opportunity for the parties to compete at scale. The combined firm will still lag behind the leading SVODs and will need to invest in efforts to capture audiences’ attention with new titles and better access to existing titles in order to grow. But as a combined entity, the parties see a prospect of rivaling their much larger competitors, in part by leaning into theatrical releases to attract audiences and ultimately subscribers. Theatrically released films represent an important way for streaming services to attract new customers and reduce churn.”
The merger has raised many concerns throughout Hollywood and the Senate antitrust committee. Cory Booker tried numerous times to get Ellison to sit in on a hearing about the merger but those invites were declined. An open letter with signatures from more than 5000 filmmakers and actors has circulated throughout the industry as Ellison $110 billion acquisition of Warner Bros. Discovery barrels onward.
“We are deeply concerned by indications of support for this merger that prioritize the interests of a small group of powerful stakeholders over the broader public good,” the letter read. “The integrity, independence, and diversity of our industry would be grievously compromised. Competition is essential for a healthy economy and a healthy democracy. So is thoughtful regulation and enforcement.”
The letter continued: “This transaction would further consolidate an already concentrated media landscape, reducing competition at a moment when our industries—and the audiences we serve—can least afford it. The result will be fewer opportunities for creators, fewer jobs across the production ecosystem, higher costs, and less choice for audiences in the United States and around the world.”
The letter was first reported by Semafor.
More to come…
