Power Players: Can the Paramount–Warner merger survive?

**Will Bain** (0:00)
So, the company that brought us this. Did you ever make anything happen? Anything you couldn't explain?
You're a wizard, Harry. And the company that gave us this.

**Michelle Fleury** (0:14)
Good morning, aviators.

**Will Bain** (0:16)
This is your captain speaking. Are trying to become one. Paramount and Warner Bros., two of Hollywood's most powerful players, are pushing for a $110 billion merger that would see them become one super studio. Executives say it's the only way to survive the streaming wars, but now 12 attorneys general, regulators around the world and a whole host of creators are saying, no deal. So today we're asking how does Paramount and its ambitious chief executive David Ellison make their dream deal a reality? And what does the holdup, the row and any future resolution mean for all of us when it comes to what's on our screens, big, small and handheld?
Yes, that's today's episode of Power Players from Business Daily. I'm Will Bain, here in the UK.

**Michelle Fleury** (1:06)
I'm Michelle Fleury, here in New York.

**Will Bain** (1:08)
And with Rahul Tandon still endangering some bathing snakes on the golf courses of Greater Calcutta. We've drafted in this week, Michelle, after you dissed our accountancy chops last week on the podcast. We've drafted in some Hollywood glamour this week, some expertise. Dawn Chmielewski, entertainment business correspondent for Reuters, joining us from, for now at least, Dawn, the cinema capital of the world in LA. Thanks for being with us.

**Dawn Chmielewski** (1:34)
Thank you.

**Will Bain** (1:35)
I was trying to think of a more original film, perhaps comp for what's going on in terms of your working life at the moment. But are you Bill Murray and Grand Hog Day here at the moment?

**Dawn Chmielewski** (1:49)
That is an apt description. It seems as though Paramount has been at the center of every media deal over the last two years.

**Will Bain** (1:57)
So here we are again. This has been going on since September. This particular will, they won't, they would Warner Bros. as well. What's the mood in Hollywood that this is kind of turning into Grand Hog Day?

**Dawn Chmielewski** (2:08)
There was a feeling perhaps even a week ago that this deal was inevitable. Paramount had gained approvals around the world. The US Justice Department gave it a thumbs up. And it seemed as though it was cruising toward a deal closed by the end of potentially even July.
But California and other states, Attorneys General had other plans as you described at the time.

**Will Bain** (2:30)
Yeah, Michelle, to stretch our film kind of analogies to absolute breaking point, that sort of piece in Lord of the Rings, thou shalt not pass. That's basically been this week from these 12 top legal officers across the stage. Why don't you round us up on what happened, and what their decision was?

**Michelle Fleury** (2:47)
Yeah, from blockbuster to will this be a flop? I think that's the key question. And you've got these 12 states Attorneys General coming in here. And I was going through the legal document, picking out some of the lines that they've kind of put in their lawsuit. They're saying this merger combines two of the nation's five major film distributors, and it will give them 85% control. They say that for every dollar generated by wide-release theatrical films and basic cable channels in this country, the combined company will pocket more than a quarter.
So it's about competition. They're saying this will have a huge impact on it.

**Will Bain** (3:26)
Well, shall we hear from one of them? Because Rob Bonta, who's been leading this sort of coalition, if you like, of Attorneys General across the United States, he's the Attorney General for California. And he spoke to Gideon Long and the team on World Business Report a little earlier this week.

**Rob Bonta** (3:39)
Well, you have two major, highly diversified companies trying to engage in a $110 billion merger. That would be the largest deal of its kind in the history of Hollywood. And they have been longtime competitors. And now all of a sudden will be merged into one company that will give them negotiating power in specific markets that will extinguish competition and allow them to dictate terms with movie theaters when it comes to two of the markets, distribution of wide release theatrical films and distribution of top grossing theatrical films. And it will also give them incredible negotiating power when it comes to licensing of basic cable channels to cable companies. They will have 50 of the most sought after cable channels in the nation and they will be able to raise prices, set dictate terms with cable companies. And that means higher prices for people who have satellite or cable TV, higher prices at movie theaters. So it is exactly the type of thing that we have seen historically that you would expect to see when competition goes away.