Aren’t these companies already in massive mergers themselves? The world of Hollywood and entertainment might very well become shaken at its core as very early talks have been reported between a potential Warner Bros. and Paramount merger!
I would like to be optimistic for this move, but there’s just no way this is going to pan out in everyone’s best interest. Right?
Despite being two of the biggest movie and T.V. show producers in Hollywood as it stands today, Warner Bros. and Paramount have been reported to being engaged in massive (preliminary) talks going on behind the scenes regarding the MERGER of these two Hollywood goliaths. And, as I said in the intro, I just don’t see how this is going to be good for anyone involved aside from the elite executives.
So, yeah. Warner Bros. Discovery and Paramount, two of the biggest producers in Hollywood, are in talks about a merger.
I mean, there is just so much to say about that one sentence alone given the sheer volume of entertainment control these two powerhouses own, but let me start off with the reason why Paramount looks like it is about to sign away its freedom (although, it already has a parent company, but you get what I mean): debt. Paramount is in debt. A LOT OF DEBT.
Despite being one of the Top-5 most powerful broadcasters and studios in Hollywood, Paramount currently has a debt of $15.1B and only a market valuation of $10B! That’s 1.5-1 debt-to-valuation ratio, which is 150% more than what the company is worth!
Now, this isn’t the worst debt to valuation percentage in the world as Warner Bros. Discovery has a pitiful debt of over $45B to the app. $30B valuation of the company (which is also about a 1.5-1 debt-to-valuation ratio), but there are far more levers for Warner Bros. Discovery to pull to relieve this debt, and Paramount is a much smaller studio than WB.
That’s why this merger is not one of equals, but rather Warner Bros. Discovery buying Paramount outright and forming a super studio comprised of Warner Bros., Discovery, and Paramount. And that’s where A LOT of these issues about this deal come in to play.
Truthfully, even if this deal was a merger of equals, the issues of market monopolization would still be prevalent, but the sheer amount of traditional broadcast viewership in the hands of a Warner Bros. Discovery and Paramount super company would be an insane app. 40% given channels like CNN, CBS, Comedy Central, Nickelodeon, MTV, CMT, Paramount Network, CBS Sports, Food Network, HGTV, TLC, TBS, TNT, Cartoon Network/Adult Swim, Discovery, Animal Planet, etc. all in the hands of these two companies.
This sheer level of dominance over traditional broadcasting would be completely unprecedented since cable TV became a household staple (which is 1948-now), and this is the number one issue that any regulator would come after this deal for. So, I’ve seen that Paramount will be trying to sell off some of their channels, but I still have doubts that it will be enough to subpress the fears of regulators over a monopolization of network television.
Nevertheless, the big issue I have with this deal is the fact that the “Big-5” Hollywood studios, which has already been dwindled down from 10 and more during the glory days of Hollywood through buyouts and monopolization, will become the “Big-4” with Paramount becoming intertwined with Warner Bros. Discovery.
(Paramount Pictures-Yellowstone-Season 5 Official Trailer)
MGM, 20th Century Fox, and Columbia Pictures have already been gobbled up by the other major studios and megalithic companies, while this deal will all but cement just Walt Disney Studios, Sony Entertainment, Universal Studios, and Warner Bros. Discovery as the major players in filmmaking.
The competition of making great films against one another will decrease, the amount of quality films will be dimmished with less oversight and larger distances between the head of one mega studio and the individual studios underneath them, and more and more films will be streamlined to fill out quotas by these massive studios. Sure, there will always be the smaller studios making films to their own liking, but this deal will further help destroy the blocker buster and major-studio film industry.
But, thankfully, you don’t have to worry too much as these talks not only are in a preliminary stage with massive roadblocks stopping this deal from happening, but it also just as likely Warner Bros. Discovery and Paramount will drown themselves in their own debt given the obvious need for WB to take out EVEN MORE debt to complete this deal.
I really think this is going to blow up in the faces of these elite studio executives…who will be trying to escape out the backdoor on their golden parachutes when all is said and done.
Images Source: Featured Image: (Warner Bros. Discovery/DC) (The Dark Knight (Trailer) (youtube.com))
In Text Image 1: (Paramount Pictures) (Yellowstone Season 5 Official Trailer | Paramount Network – YouTube)
