(Photo by Mario Tama/Getty Images)
Getty Images
An imminent settlement of the lawsuit by 12 states’ attorneys general blocking the $111 billion purchase of Warner Bros. Discovery by much smaller rival Paramount Skydance removes one of the last barriers to a fundamental reshaping of Hollywood’s battered entertainment industry.
It’s only the latest mega-merger involving the century-old Warner Bros., many of whose predecessor deals have proven expensive failures (see Time Warner AOL and AT&T’s muddleheaded, mercifully brief ownership of Warner Media).
But the settlement, which extracted a number of modest concessions from the centibillionaire Larry Ellison’s son David Ellison in exchange for allowing the deal to proceed, means the number of traditional Hollywood entertainment companies shrinks to just four: Disney, Sony Pictures, Universal and whatever name Ellison decides to call his future combined studio.
It likely also means hundreds, if not thousands, of layoffs to quickly reduce a crippling level of debt – as much as $80 billion – that faces the newly merged entity. That will further swell the ranks of unemployed entertainment business workers in Los Angeles, long savaged by cost-cutting, other mergers and runaway production to other cities and countries.
Paramount-Warner reductions are almost inevitable and will perhaps be even larger and more urgent if Ellison holds to his agreement with the state AGs to keep the combined operation headquartered in the Los Angeles area, while running two sprawling and historic TV and film production lots there.
But the deal is only the latest in the past few years shrinking independent entertainment companies into barely-there nameplates maintained as much for nostalgia as business purpose.
In 2021, Amazon Prime Studios scooped up MGM, which once dominated the town’s movie output with “more stars than there are in the heavens,” for $8.45 billion. The final price actually ended up another $1 billion higher after the studio paid the Broccoli family in early 2025 to finally have full creative control of the James Bond franchise.
Disney in 2019 bought most of another old-line entertainment company, Fox, from Rupert Murdoch for $71 billion in 2019, though Fox’s broadcast and cable operations remain under Murdoch control and have over the past year moved aggressively into streaming video and podcasting.
The remaining vestiges of Fox within Disney include the renamed Searchlight (née Fox Searchlight) specialty film division and the productive FX cable network whose shows are a central part of Hulu and, increasingly, Disney+ streaming services.
That leaves, or at least will leave, four major traditional entertainment companies in Hollywood. Still unresolved is a suit by the Writers Guild of America, arguing the merger will reduce the number of places its members can sell their work further and excessively concentrating control over storytelling outlets.
While the suit’s contention is generally true, it also avoids the reality that more and more entertainment (along with audience view time) these days isn’t coming from traditional studios in traditional forms for consumption in traditional ways. Writers actually have more outlets than ever, though those outlets may pay far less than cable or broadcast networks or provide less prominent showcases for the work.
For instance, in the past 10 months, the YouTube-reared directors of Iron Lung, Obsession and Backrooms all created hit horror films (Obsession alone has grossed $516 million worldwide) with extremely low budgets, ardent online audiences and word-of-mouth marketing.
Their success is spurring studio deals with other online auteurs, a predictable copycat move that likely will yield some expensive bombs. But the phalanx of online-first creators will continue to capture viewership on many platforms far from WGA-authorized sets and deals.
Similarly, one of the hottest trends in Hollywood the past year has been the rise in interest in vertical video, episodic stories shot in mobile-friendly portrait aspect ratio.
Verts have been a multi-billion-dollar business in China for several years, largely in the romantasy hybrid genre and built around mobile-game-inspired economic models that rely on endless cliffhangers to encourage the most devoted audiences to keep spending small amounts for the next episode.
But creators in the West are branching out into new economic models and genres, including horror and unscripted reality programming. Disney, Netflix and Peacock all have begun offering vertical programming.
More generally, Netflix and the rise of free, ad-supported TV, including platforms such as Tubi and the Roku Channel, have absorbed significant shares of audience attention.
The biggest audience, however, belongs to YouTube, which has been inexorably growing its market-leading share of audience time in Nielsen’s monthly The Gauge and other metrics over the past two years.
The biggest shift the past few years has been the rise of YouTube viewing on connected TVs, the biggest and best screens in the house. Younger audiences in particular don’t differentiate between watching a string of well-produced YouTube segments and shows on broadcast or cable, other than they have more control over what and when they watch.
The travails seem destined to continue, and perhaps worsen, for traditional Hollywood and the people who have carved out long-term, sometimes lucrative livings from jobs on both sides of the camera over the past century.
Streaming has proven both a must-do and an expensive way to try to get and keep an audience. Billions of dollars in losses on streaming have only recently lessened to break even, while cable and broadcast operations continue to see audiences (and thus ad dollars and cable carriage fees) decline.
The film business is headed for its best year at the box office since before the pandemic, but it remains a very big dice roll, requiring huge spending on reliable franchises and pre-marketed adaptations.
Ellison has repeatedly promised to release an eye-popping 30 movies a year into theaters, but that mostly seems likely to guarantee a lot of expensive failures, given the typical ratio of hits and misses in the industry for much of its existence. More movies doesn’t guarantee more successes.
So, congrats to the persistent and audacious Ellison for likely finally pulling together his much-sought and massively expensive deal. Now he, and Hollywood, will find out whether it was worth the cost.
Leave a comment