Attorney General Rob Bonta is poised to make a decision soon on whether to formally oppose Paramount‘s proposed $110 billion acquisition of Warner Bros. In an exclusive talk with Reuters, Bonta said he was operating against a “ticking clock” and that the objections of industry employees added “even more red flags” to the issue of potential competition harm.
Bonta’s office has been studying the merger for months to determine if it violates U.S. antitrust law. The agreement has already raised concerns among movie theater chains, actors and other members of the film industry that a merger of two big film studios could lessen competition in general. Their concerns are real and personal – decreased compensation for crew, increased ticket costs for viewers, reduced options for content distributors and streaming services.
This sort of consolidation panic feels a bit familiar. If you’ve observed the trend in streaming services’ pricing over the years, you know what to expect. The little freedoms: the choice of studio, a fair rate, the opportunity to see the mid-budget film in the cinema – they’re the first to go. That very fact is what California’s antitrust cops are seeking to stop.
From an expertise perspective, this review is of special interest because under California law, the state’s attorney general can block any merger that would substantially lessen competition, such as competition between employers for specialized workers. But that’s not something to take lightly in Hollywood, where the below-the-line crew, writers and VFX artists are already overworked and underpaid. Bonta emphasized the special role that his office can play in ensuring jobs are protected in Hollywood in regard to the proposed Paramount-Warner Bros. deal.
There’s only a limited amount of time. The U.S. Department of Justice is likely to make a decision soon, and antitrust authorities in Europe are expected to make a decision by early July. The deals could be completed soon after those reviews, a source with knowledge of the situation said. The move adds a lot of pressure to Bonta’s team, which is regarded as the most likely challenger to the transaction. That’s the case, Bonta acknowledged, saying, “If we choose to do that, there’s not a lot of time left before we will need to do something.”
Paramount has tried to assuage concerns that the merger would affect production or employment. A spokesman for the company stated that the merger gives Paramount “all the economic reasons” to expand its production because they would want to increase their streaming service subscriptions. Paramount’s CEO David Ellison has publicly announced that the merged firm would be releasing thirty films a year in theatres. In recent court filings, the company also has pointed out that theatrical release is still a critical part of marketing its streaming services.
Nevertheless, Bonta doesn’t trust corporate assurances without any enforcement mechanism. He noted that when it came to behavioral remedies, where companies agree to voluntarily do something, he didn’t believe the company should be forced to do so for Paramount. He believes that such guarantees are not always sufficient to guarantee competition. To those observing the antitrust enforcement landscape, that’s a pretty clear message: Bonta favors restructuring, not handshakes.
This will have a huge impact on a wide range of people, both in the movie-going public and among the film industry community. A combined Paramount-Warner Bros, on the other hand, would result in a steady flow of big budget movies and a stronger streaming catalogue that would appeal to subscribers who desire volume and variety. Meanwhile, independent movie theaters and smaller production firms may be subjected to higher barriers to getting popular content. Employers may not be willing to pay as much as they used to, since there aren’t as many of them bidding for their skills.
