Entertainment
Paramount’s Warner Bros. Merger Is Officially in Serious Trouble
For the last decade or two, fans have watched the changing landscape of Hollywood with more interest than usual. Not only has the streaming era thrown the entire business for a loop, it has pushed companies into mergers, acquisitions, and re-brands that would have seemed unthinkable in the past. Fans have seen firsthand how these deals can affect their favorite TV shows and movies, yet it has begun to seem inevitable that every merger will be approved. Paramount‘s impending merger with Warner Bros. was no exception, but this week, federal Judge Araceli Martinez-Olguin gave us real hope that the two companies might be kept apart.
Martinez-Olguin is a judge in the U.S. District Court for Northern District of California in Oakland. On Friday, she heard arguments from a coalition of 12 states arguing that the Paramount-Warner Bros. merger would be a violation of federal anti-trust laws, and would be detrimental to the film industry — and the economy as a whole. According to a report by Variety, Paramount and Warner Bros. had previously agreed not to close their deal before July 22. With that deadline fast approaching, Martinez-Olguin approved a 14-day temporary restraining order, putting it off at least a little longer.
Two weeks may not sound like a lot — especially for a deal this big with so much momentum behind it — but it is the first ray of hope we’ve seen in a case like this for years now. After Disney absorbed both LucasFilm and Marvel Studios, it seemed hard to imagine any other giant mergers coming into question, but this time might be different. If the court finds serious fault with this merger, it could represent a whole new era for Hollywood.
The Paramount-Warner Bros. Merger Will Make Movies Worse
The coalition of states opposing this merger is led by California, and the state’s attorney general, Rob Bonta issued a celebratory statement on after Martinez-Olguin’s order. Bonta said that this “megamerger” would lead to “fewer opportunities for more people,” and “worse products and services for all people.” It’s a sentiment that many critics have shared over the last few years, yet usually with an air of defeat. Here, it seems like the case against the merger might actually have a chance now.
As we’ve seen before, a merger between two massive companies like this typically starts off with mass layoffs. The newly-formed corporation no longer needs two people doing each job now that they’re one entity, and protecting the employment rate is a major part of the state’s case. However, anti-trust laws are meant to protect the economy from “anticompetitive” behavior, meaning that companies can collude to set fixed prices on their goods and services. Under a monopoly, consumers have nowhere else to go, so they’re forced to accept the quality and prices offered.
This could be a real concern in today’s day and age, as consumers have watched streaming take over the entertainment industry only to fluctuate wildly in price. However, a spokesperson for Paramount was confident that they could overcome the anticompetitive argument in particular. They told Variety that these claims do not reflect “modern market realities,” adding: “This merger is lawful, pro-competitive, and will benefit consumers, creators, workers, and the entertainment industry.”
Judging by other massive mergers in Hollywood, public sentiment seems to be against these deals in general. There are hardly any Star Wars discussions these days without mention of the drop in quality since Disney took over, and the same is said of Marvel. Warner Bros. already suffered a major blow to its prestigious branding when it combined with Discovery several years ago, putting reality TV titles alongside some of the most esteemed films ever made on HBO Max. These deals have definitely detracted from the quality of entertainment in some cases, and more importantly, critics and fans have their eyes out for it to happen again in any future mergers.
Canceling The Paramount-Warner Bros. Merger Would Have Consequences
With all that said, the battle against this merger is hardly over, and there is too much money on the line for the corporations themselves to give up easily. If Martinez-Olguin did rule that the merger violated anti-trust laws, Paramount and Warner Bros. might need to pay up to $7 billion in breakup fees. On top of that, all the plans for the merger would need to be scrapped, taking with it all the plans both companies have been making as they’ve assumed this deal would go through.
The next move in this case will likely be to determine how much longer the merger can be stalled. Martinez-Olguin’s restraining order could reportedly be extended as long as 28 days in total, during which time she will need to decide on the coalition’s request for a preliminary injunction to hold off the merger indefinitely while their lawsuit takes its course. Historically, injunctions like this have worked to unravel merger deals before they can be finalized, regardless of the outcome of the lawsuits themselves.
Meanwhile, Paramount’s lawyers argue that the entertainment industry would be less competitive if this deal falls through, claiming that neither Paramount nor Warner Bros. alone can rival Netflix, Amazon, and other players on that level. If they merge, the two companies believe they can put up more of a fight. Whatever the outcome is, it will likely be decided by the end of September, and the future of Hollywood will be a bit easier to predict.
You must be logged in to post a comment Login