Netflix has walked away from the Warner Bros. deal, leaving the spoils to Paramount. Netflix Co-CEOs Ted Sarandos and Greg Peters explained in a joint statement, “This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
Given the cozy relationship between the Ellisons and the Trump administration, it seems likely that U.S. regulatory approval for the merger is assured. And European regulators seem equally likely to approve it, perhaps with only a limited number of divestments in overlapping business areas. The combination of Netflix and Warner Bros. would have met with more concern from regulators, given the dominant market share that the resulting company would have had in streaming.
With the board of directors of both companies having given their unanimous approval, the massive $110 billion merger is expected to close quickly, within the next 6-8 months. Hollywood is now bracing for the impact of consolidation, with thousands of jobs on the line. Paramount management is drilling down on the potential “synergies” between the two companies, with the potential to cut $6 billion in expenses from combining departments and staff reductions. Currently, Paramount reports a payroll of 17,600 employees while Warner Bros. Discovery has around 35,000.
Paramount CEO David Ellison has set a goal of the combined company producing at least 30 new theatrically released movies every year. This would be an impressive output, and especially important to movie theatres, which rely on Hollywood’s major studios for the product that brings in most of their customers. Hollywood’s Big Six original studios turned into five when Disney purchased Fox in 2019, and will soon be down to four after the Paramount-Warner Bros. merger.
