If Sony and Apollo were to successfully acquire Paramount Global, it is speculated that they would aim to maintain the current level of theatrical release output from both studios. This would mean not reducing the number of movies hitting the big screen. However, they may look to streamline the conglomerate by potentially selling off certain assets such as CBS, linear channels like MTV, and the Paramount Plus streaming service. This strategy was reported by Deadline in regards to theatrical output, while the New York Times mentioned plans by Sony and Apollo to cut Paramount’s TV assets as part of their $26 billion bid for the entertainment company.
It appears that Sony has not shared their full plan with Paramount and its advisors. Despite Paramount’s decision to engage in talks with Sony and Apollo, negotiations with David Ellison’s Skydance/Red Bird are still ongoing. While talks have progressed with Skydance, the interest remains. However, concerns have been raised about a potential Sony-Paramount merger in relation to FCC regulations, as foreign-owned conglomerates are restricted from owning US broadcast stations.
Fear in the Industry
There is a sense of fear and apprehension within Hollywood, particularly among exhibitors, regarding a possible Sony-Paramount merger. Many in the industry still remember the aftermath of the 2019 Disney-Fox merger, which led to a reduction in the number of films being released. The fear is that another major studio consolidation could result in even fewer titles hitting the marketplace. With the entertainment industry already facing challenges due to strikes and the impact of the pandemic, losing another major player could have significant repercussions.
Competing with Streaming Services
Despite the concerns surrounding a potential merger, sources suggest that the goal of a Sony-Paramount combination would not be to scale back operations but rather to ramp up competition with streaming services. The vision is to increase the number of wide releases to around 20 per year, a move aimed at challenging the dominance of streaming platforms. The plan seems to be focused on staying competitive in a rapidly changing entertainment landscape, rather than following the path of past mergers.
From a financial perspective, a merger between Sony and Paramount could have significant implications. Both studios individually grossed around $2 billion at the global box office last year. If combined, their output would compete with industry giants like Universal and Disney. The potential synergy between the two studios could result in a combined box office gross of $4 billion, placing them among the top players in the entertainment industry.
It is important to note that a deal of this magnitude would need approval from various regulatory bodies, including the Justice Department’s Antitrust division, the FTC, and the FCC. The current administration under President Biden is known to be cautious about mergers, especially those that could result in job losses. The process of obtaining regulatory approval could be lengthy and complex, involving detailed scrutiny of the deal’s impact on competition and market dynamics.
The potential acquisition of Paramount Global by Sony and Apollo could have far-reaching implications for the entertainment industry. While the strategy behind the merger remains unclear, the impact on theatrical release, competition with streaming services, and regulatory hurdles are all factors that need to be carefully considered. The outcome of these negotiations could reshape the landscape of the entertainment industry and have lasting effects on both studios and the wider market.
Leave a Reply