{"id":627219,"date":"2024-07-10T20:16:21","date_gmt":"2024-07-10T17:16:21","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/paramounts-merger-with-skydance-to-test-dojs-tolerance-for-big-media-consolidation\/"},"modified":"2024-07-10T20:16:21","modified_gmt":"2024-07-10T17:16:21","slug":"paramounts-merger-with-skydance-to-test-dojs-tolerance-for-big-media-consolidation","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/paramounts-merger-with-skydance-to-test-dojs-tolerance-for-big-media-consolidation\/","title":{"rendered":"#Paramount\u2019s Merger With Skydance to Test DOJ\u2019s Tolerance for Big Media Consolidation"},"content":{"rendered":"
\n

\n Dan Gregor, a writer and producer on Chip \u2019n Dale: Rescue Rangers<\/em> and How I Met Your Mother<\/em>, started his career roughly 20 years ago during an era when Hollywood looked vastly different.<\/p>\n

\n Back then, it was normal for him to develop a pitch for a TV show and take it to multiple networks. With a handful of offers on the table, he says he was able to negotiate the best deal possible. Two decades and several roll-ups later, that\u2019s no longer the case.<\/p>\n

\n \u201cYou used to have a marketplace to sell your concept to,\u201d Gregor explains. \u201cYou\u2019d often get multiple offers, and you\u2019d have a bidding war. You could actually negotiate up all of your rates, salaries and others rights based on competition between the studios and buyers. Now that the studios and networks are functionally the same, it\u2019s almost always a take it or leave it offer.\u201d<\/p>\n

\n On July 7, the group led by David Ellison\u2019s Skydance Media<\/a> prevailed in gaining control of Paramount Global. The proposed purchase would be the latest merger in an industry that, some critics say, has seen too much dealmaking. The Department of Justice, which typically handles cases in media, could sue to block the purchase, pointing to overconsolidation in Hollywood and a swing toward the combination of producers and distributors that\u2019s undercut creators and talent. <\/p>\n

\n Rebecca Allensworth, an antitrust professor at Vanderbilt University Law School, says there\u2019s a \u201csignificant risk\u201d the agency files a lawsuit to block the acquisition. \u201cPart of that is just how aggressive they\u2019ve been against high-profile mergers that people read about in papers,\u201d she adds. \u201cThey might say this is a trend toward concentration that\u2019s problematic.\u201d\u00a0<\/p>\n

\n The 12-year period between 2009 and 2020 saw more than $400 billion in media and consumer telecommunications megame<\/a>rgers. Five transactions make up a bulk of that figure \u2014 Comcast and NBCUniversal (2011); AT&T and DirecTV (2015); AT&T and Time Warner (2018); Charter, Time Warner Cable and Bright House (2016); and Disney and Fox (2018).\u00a0This wave of consolidation killed thousands of jobs while blurring the separation of studios and distributors, giving rise to behemoths that control both the content production and distribution pipelines.<\/p>\n

\n Regulators are taking notice.<\/p>\n

\n \u201cMedia and entertainment is an area we\u2019re following closely in part because we were hearing from the writers,\u201d FTC chair Lina Khan told The Hollywood Reporter<\/em> in November. \u201cWe just heard a lot about consolidation among the studios, the networks, and how that was ultimately undermining the workers, as well as the viewers.\u201d<\/p>\n

\n The proposed merger will be reported to the Federal Trade Commission and Department of Justice. After an initial 30-day review period in which the purchase won\u2019t be allowed to close, the agencies can follow up for what\u2019s called a \u201csecond request\u201d for information to decide whether they\u2019ll challenge the deal.<\/p>\n

\n If a lawsuit is filed, it could come under the purview of the next administration, which may choose to abandon it as part of a more permissive app<\/a>roach to antitrust enforcement. <\/p>\n

\n Historically, regulators have only sued to block large deals between horizontal rivals that compete directly against each other (think AMC and Regal, both top theater operators). But under this administration, they\u2019ve doggedly pursued lawsuits that stretch the limits of antitrust law, in part, to signal that the days of rubber-stamping iffy deals are over.<\/p>\n

\n On paper, the Justice Department may have to squint to see the bona fides of what a legal challenge would look like. Paramount is considered among the top five studios in production, coming in fifth last year in global marketshare with 10.6 percent of the box office ($842 million domestic, $1.18 billion overseas) per Comscore, but Skydance is smaller player nowhere close to the likes of Disney or Universal. Legal experts say it\u2019d be difficult to make the case of Paramount wielding oversized market power if the deal goes through.<\/p>\n

\n That\u2019s where the new merger guidelines<\/a> come in. In July, the FTC and DOJ jointly released a fresh road map for regulatory review of deals that accounts for acquisitions in industries undergoing \u201ca trend toward consolidation.\u201d It states that the agencies will consider whether an industry has gone from having many competitors to becoming concentrated, which may suggest a great risk of harm since a new rival would be less likely to replace or offset the decrease in competition that flows from the proposed deal, as well as risks associated with price-fixing and self-dealing via self-preferential agreements (think a studio giving a sweetheart deal to its network arm). The guidelines also explicitly underscore dynamics related to vertical integration between companies at different levels of the supply chain, such as producers and distributors, and whether such roll-ups prevent the \u201cemergence of new competitive threats over time.\u201d<\/p>\n

\n Some of these ideals flow from Brown Shoe Co. v. United States<\/em>. In that case, the Supreme Court in 1962 affirmed a lower court\u2019s ruling blocking a merger between Brown, the fourth largest manufacturer and the third largest retailer of shoes, and Kinney, the eighth largest shoe retailer, whose merged business would\u2019ve had only five percent of the retail market. The deal was found to be in violation of antitrust laws at two levels: the vertical tie between Brown\u2019s manufacturing business and Kinney\u2019s retail outlets threatening competition in manufacturing, and the horizontal combination of the companies\u2019 retail outlets. Instead of emphasizing the size of the merger, the court, in part, leaned on the industry\u2019s \u201ctrend toward concentration.\u201d The upshot? A series<\/a> of horizontal and vertical mergers in a single industry over time will ultimately result in harm to competition, regardless of the specific deal at issue.<\/p>\n

\n Like that case, the combination of Paramount and Skydance\u2019s production businesses could augment the former\u2019s role as a distributor, primarily through content on Paramount+, which has 71 million subscribers. Though the company has a small share of the streaming market, Hollywood is hurdling toward a direction incentivizing dual roles as content suppliers and distributors.<\/p>\n

\n This, in turn, has eroded working conditions for talent, who\u2019re increasingly facing a market in which they have fewer bidders for their work. Katherine Walczak, a writer on The Flash<\/em>, wrote last year to the FTC that \u201ccorporate consolidation discourages competitive wages.\u201d When she sold her first pilot in 2020, she said that she couldn\u2019t shop it anywhere outside the Disney family, limiting her choices to FX, Hulu, ABC and Disney+, because her producers had a production deal through ABC Studios.<\/p>\n

\n \u201cIn a free market, I could have pitched the pilot to many more networks and in success, creating a bidding war (which used to happen in the 90s),\u201d she continued. \u201cEssentially, the marketplace would have determined the value of my product. But we aren\u2019t in the 90s, we\u2019re in the era of monopolies, and as it stood, ABC Studios could pay me whatever they wanted for my work because even if two of their four networks wanted the purchase the piece, they wouldn\u2019t have competed against one another since they are owned by the same parent company.\u201d<\/p>\n

\n Dozens of writers shared similar experiences. \u201cMultiple times in the past two years, I\u2019ve produced or created a show that we\u2019ve taken to the marketplace, and been told by executives at other streamers or networks that they love the project creatively and want to buy it, but they cannot do so because their highest-level bosses have given them a mandate to focus on buying and greenlighting shows \u2018in-house\u2019 \u2014 meaning, shows produced by studios that are owned by the same parent company that owns their streamer\/network,\u201d wrote Nick Antosca, an executive producer for Antlers<\/em> and Chucky<\/em>.<\/p>\n

\n Last year, the Writers Guild of America West issued a report calling upon regulators to curb future consolidation in Hollywood, \u201cproactively\u201d investigate signs of anti-competitive practices and ramp up regulation and monitoring of streaming platforms in particular. It argued that recent mergers and deregulation \u201chave laid the groundwork for a future of increased market power that could soon leave just three companies controlling what content is made, what consumers can watch, and how they can watch it.\u201d<\/p>\n

\n The new guidelines, which lack the force of law but signal how regulators assess deals, also require companies to consider the impact of proposed transactions on labor, signaling that the agencies intend to review whether mergers could negatively impact wages and working conditions. In 2022, the Justice Department successfully blocked Penguin Random House\u2019s $2.175 billion bid to buy rival Simon & Schuster from Paramount Global in a bid to crack down on so-called monopsonies, a dynamic in which a buyer with outsize market power can purchase labor and goods at prices under market value.<\/p>\n

\n If a lawsuit challenging the Paramount, Skydance partnership isn\u2019t filed, Skydance chief executive David Ellison and former NBCUniversal chief executive Jeff Shell will pursue $2 billion in cost efficiencies to manage the drop-off of the company\u2019s linear business. Like with any megamerger, this likely means hundreds of lost jobs.<\/p>\n

\n \u201cWe\u2019ve got to run these businesses in a different way as they decline,\u201d Shell said.<\/p>\n<\/p><\/div>\n

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Dan Gregor, a writer and producer on Chip \u2019n Dale: Rescue Rangers and How I Met Your Mother, started his career roughly 20 years ago during an era when Hollywood looked vastly different. Back then, it was normal for him to develop a pitch for a TV show and take it to multiple networks. With…<\/p>\n","protected":false},"author":1,"featured_media":627220,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/www.hollywoodreporter.com\/wp-content\/uploads\/2024\/07\/GettyImages-2155619291.jpg?w=1440&h=810&crop=1","fifu_image_alt":"","footnotes":""},"categories":[17],"tags":[134879],"class_list":["post-627219","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-social-mediaa","tag-paramount-global"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/627219","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=627219"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/627219\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/627220"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=627219"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=627219"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=627219"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}