International leaders are responding to the bombshell news overnight that Netflix is stepping away from the Warner Bros deal, paving the way for David Ellison to finally get his shiny new toy.
While there is a level of weariness over a sale most we spoke to would rather wasn’t on the table at all, plenty have strong feelings, both for and against Paramount‘s ‘victory’.
U.S. and EU regulators will have their say, so this isn’t the final chapter in the saga, but the most immediate concern raised to us was for the number of job losses that could come to pass due to duplication of roles. “The cuts will be brutal,” a longtime studio leader told us.
Other structural concerns were raised, from the health of the broader industry to creative diversity and political ramifications.
A veteran regional studio head told us: “Just the debt repayment schedule alone doesn’t bear thinking about. If Netflix don’t think it makes sense at that price, then what genius at Paramount thinks they can make it work? It’s very easy to make savings by cutting budgets and people, it’s much harder to organically and systematically grow a business. Paramount’s modus operandi has been the former for years under Viacom. Netflix on the other hand have shown there is another and better way. There’ll be more blood than in Iron Lung, and more BS from exhibition talking of their great friends and colleagues on the studio side whilst not only stabbing Warner employees in the back, but pushing them down the stairs at the same time.”
They continued: “Get ready for 30 rehashed franchise movies a year generated by Oracle AI, with no-one left to market them. But don’t fear: theatrical will keep their precious windows to showcase Transformers vs Superman 8.”
A leading European producer-financier also expressed the view that this may have been a missed opportunity for the industry: “I would ring the alarm bell, because it feels like the transaction is entirely driven by economics and is not about the correct strategic partner. While Netflix seemed for a while like a strange custodian of WBD, in the end they are by far the most innovative, rule-breaking entertainment business in a generation, or ever.”
They continued: “This iteration of Paramount has no history of great innovation and as such, there’s no reason to expect that this will be anything other than the same as every other media merger – overlap and consolidation and less risk. For an entertainment industry already on its knees I think it’s a blow to the head. Paramount would have kept raising stupid amounts of debt and equity to force this deal through in this current regulatory environment/administration.”
Another top producer who regularly works with U.S. studios said: “Like many, I’m horrified this is happening at all. I know there was some surprise within Netflix that Ted walked away so readily. But he is a canny guy. These tech companies don’t let their emotions get in the way of furthering their business. It’s a different mentality…Paramount has struggled to run one studio, let alone two. They’re going to have to make cuts like crazy.”
Philippa Childs, the head of the UK’s largest entertainment union said today: “Whoever takes over Warner Bros, continuing consolidation within the creative industries is worrying for anyone who values competition and a plurality of voices and stories in entertainment and the media. I am concerned that the takeover will have a negative impact on jobs and add to uncertainty in what is already an incredibly precarious sector to work in. We also need to be increasingly vigilant to prevent further homogenisation of content and the loss of any more of the UK’s unique and distinctive output.”
According to reports, the Paramount deal has been made possible in large part thanks to equity from Qatar, Abu Dhabi and Saudi Arabia. Middle East money is already flowing freely through global entertainment and media but many are wondering what strings will be attached to this latest and biggest U.S. media investment. These weren’t charity donations.
“These are important questions to be asking,” said one studio vet based overseas. “We may never know the answers, but the idea that Middle East sovereigns will own such large pieces of the U.S. (and global) media is shocking. We’re just inured to it all after a year plus of Trump madness.”
A Middle East-based industry veteran predicted that the investment is a bid for more influence and soft power in the U.S. “Of course it is”, they said.
Not everyone we spoke to this morning were so downbeat. Some are glad that Paramount is back in the driver’s seat.
The head of a leading European film distribution company with multiple studio deals told us: “Of course everyone would prefer that Warner Bros stayed stand-alone, but that won’t happen. Paramount’s acquisition is better than that of Netflix because at heart David Ellison is a producer — he likes filmmakers.”
Another longtime distribution boss told us: “The sale to Paramount is much better for the marketplace. Ellison was never going to give up. Netflix dominates too much already. Within five years, they would have kept the theatrical route for maybe their top six titles but the rest would have been straight to the platform. That’s bad for business and consumers.”
Another source who has had leading roles at multiple studios posited: “I don’t like David Ellison’s politics but I think this will change over time. You can’t run Warner Bros Discovery as a right wing content creator and expect to make money. The last Paramount owners were bad. At least this group is in it for the long haul and not simply a financial manoeuvre.”
Vue founder and CEO Tim Richards is one of many we’ve spoken to recently who preferred no deal at all: “It’s just unfortunate that Warner Brothers is even in this position,” the exhibition vet told us last week. “It’s an incredible studio…Last year the company made $4.2BN in box office. It’s not a studio that was really in trouble.”
But he likely echoed the sentiments of many exhibitors by adding: “Cinema operators worldwide have tried to work with Netflix for 15 years, unsuccessfully, and it’s been very frustrating. It’s a company that has just discovered in the last three weeks that they want to release movies theatrically, compared to a highly respected filmmaker like David Ellison who has a 15 year track record of producing some absolutely amazing commercial films worldwide.”
English (US) ·