With CinemaCon less than two weeks away, theater lobbying group Cinema United sent a letter to state attorneys general William Tong (Connecticut) and Marty Jackley (South Dakota) on Friday, urging them to scrutinize and potentially block the $110 billion Paramount-Warner Bros. Discovery merger.
“The stakes of this deal could not be higher for our members and the future of the U.S. film industry,” Michael O’Leary, Cinema United CEO, wrote in the letter. “Further consolidation will inevitably lead to fewer movies being made. Fewer movies will mean fewer theatres, fewer jobs, and fewer choices for American consumers, along with higher prices.”
O’Leary added: “I therefore respectfully urge you to closely scrutinize this acquisition and the likelihood that it will substantially lessen competition in the entertainment industry and cause harm to Main Street America.”
He also pointed to the Disney-20th Century Fox merger as a cautionary tale. “In 2016, for example, Disney and 20th Century Fox separately released a combined
26 new titles, opening in more than 2,000 domestic locations,” O’Leary wrote. “In the wake of the Disney/Fox merger, however, last year, their combined total fell to just 14 wide releases, a 46% decline.”
O’Leary further noted that, in terms of box office, “20th Century Fox titles generated $1 billion less last year than in 2016 — a nearly 70% drop.”
In 2019, Disney’s acquisition of 20th Century Fox went largely unchallenged by regulators, and in the years since, the Disney-owned 20th Century Studios has never released more than five films in theaters in a single year, compared to the 12-18 films it released annually in the 2010s.
“Based on our review of the proposed merger between Paramount and Warner Bros., we have no reason to believe the outcome would be any different,” O’Leary wrote.
Historically, state AGs have worked in tandem with federal regulators like the Department of Justice and Federal Trade Commission on antitrust enforcement. But under the Trump administration, M&A regulation has taken a radical turn.
“The federal government is retreating from its traditional role, abdicating its responsibility to enforce antitrust law and seemingly picking winners and losers,” California AG Rob Bonta told TheWrap.
That’s forcing the state AGs to play a more central role in deciding whether some of the biggest deals in the U.S. will reduce competition and hurt consumers.
“I strongly urge you to thoroughly investigate and move to block this proposed merger to ensure it does not harm competition or our local communities,” O’Leary concluded.
