Paramount takes over Warner Bros in mega deal

Rahul Tandon (0:00)

It's a new era for the entertainment industry.

SPEAKER_2 (0:03)

You might have slightly more mid-range films instead of just big titles and little tiny ones that the Oscar audience love, but no one else goes to see.

Duncan Cranberry Island (0:11)

Fewer choices for consumers, fewer work opportunities for our members. That, I think, is the core concern.

Rahul Tandon (0:18)

It's World Business Report from the BBC World Service. I'm Rahul Tandon. We're gonna find out what the Paramount Warner merger means for cinema goers across the globe, and we'll tell you why the price of your favorite chocolate bar could be about to go up.

So, the company that brought us this.

George Combo (0:43)

Did you ever make anything happen?

Ben Greensmith (0:45)

Anything you couldn't explain?

George Combo (0:50)

You're a wizard, Harry.

Rahul Tandon (0:52)

And the company that gave us this.

Duncan Cranberry Island (0:55)

Good morning, aviators.

Ron Bonta (0:56)

This is your captain speaking.

Rahul Tandon (1:00)

And finally, and it's become a bit of a soap opera. Become one. You heard a bit of Harry Potter and Top Gun there. Because Paramount's $110 billion takeover, Warner Bros Discovery, well, it's finally gone through. It's now called Skydance. But what does it mean for you and me and all of those who love going to the cinema and watching those series on streaming? It's a big story. So, we're going to devote quite a bit of the program to it. And we're going to bring in a couple of people who have been following this very closely. We have Guy Petty, former Paramount executive. He's now head of the consultancy firm, Fulcrum Media and firstly, Meg James, senior entertainment industry writer at the Los Angeles Times, who's in LA, was driving, has pulled over for us. Meg, thank you for that. Where were you heading to?

Meg James (1:44)

Well, I'm headed to Paramount for meet the new executives session later this afternoon.

Rahul Tandon (1:52)

And just for our listeners, this is a huge moment for the entertainment industry. And it's been quite a soap opera itself in getting here, hasn't it?

Meg James (2:02)

Oh my goodness. I mean, David Ellison prevailed today after fending off Netflix, after fending off hordes of Hollywood detractors who really questioned this merger, and also a lawsuit from 12 state attorneys general, including California's.

Rahul Tandon (2:20)

Yeah. But he got there. It's had a happy ending for David Ellison. But Guy, is he going to be a happy ending for the industry here? Because they've taken on massive debt, haven't they, David Ellison, to make this deal go through. So he's going to have to cut a lot of costs, isn't he?

Guy Petty (2:38)

Yeah, I think most of those costs though, well, I say most, a lot of those costs are going to be coming, I think, from the business side, as opposed to the creative side. This mega company, if you will, really has to create a lot and produce a lot of content just for their services, to generate those revenues needed to pay off that debt.

Rahul Tandon (3:01)

Well, you raised that point there, and that's interesting, because Meg was talking about the fact before that a lot of the district attorneys had opposed this. They changed their mind recently. Here's Ron Bonta, he's the district attorney of California. He initially opposed the deal, but then struck an agreement with what is now Skydance.

Ron Bonta (3:18)

The company will also produce 30 movies in each of the first two years of the deal, then 32 movies in each of the following three years. So it is tiered. Each year, at least four of those films must be independent films, and at least 20% of those must be blockbusters.

That adds up to $1.5 billion more at minimum for film and TV production right here in our country, right here in America.

Rahul Tandon (3:48)

Okay, so question to both of you. Meg, if you want to go first, and then Guy, if you want to pick up when Meg is finished. So for people like me who love the cinema, all the people listening today, are they going to see much change now? Are we going to see the same number of films, the same type of films?

Meg James (4:04)

Well, I mean, what the Attorney General Rob Bonta was able to secure is basically the same level of productions that is currently ongoing between the two studios. Paramount had about 14 films this year, Warner Bros a little bit more. Its last film, Digger, was a colossal failure. So that sort of raises the issue of how long will these two studios, which will operate a little bit independently, but not really, the Warner Bros executives were excused on Friday.