Paramount Skydance Takeover of Warner Held Up Till Next Year

Paramount's takeover of Warner Bros Studio has hit roadblocks as it increasingly looks like the type of media concentration that the world has been trying to avoid. The Ellison family lays at the heart of much of the controversy with the promise of David Ellison to change CNN to satisfy ally Donald Trump. However, there is so much more going on.

Paramount Pictures as a studio goes all the way back to 1912 and was one of the global big five. In the U.S. it was second oldest studios after Universal Studios and right from the beginning was pursued by the U.S. government for antitrust. In a nutshell, the U.S. government tried to make sure there was a balance between copyright, patents and trademarks as well as ownership and business relations to ensure competition. This has made the U.S. an economic powerhouse.

The movie industry itself would not have grown were it not for breaking up the Edison Trust based upon Thomas Edison's movie making patents. The U.S. government broke up the trust that had operated from 1908 to 1915. Till that time it was foreign films that dominated American screens and enriched overseas owners and Thomas Edison. Independent filmmakers fought back and U.S. courts agreed that the level of control and profiteering was hurting an industry that was set to take off.

The federal government in the U.S. has always regulated the TV industry and pursued antitrust. TV and film companies have been snapped up in various megamergers with invariably comes with massive layoffs and usually less content coming out. Fewer of the studios produce content and there are less buyers of independently produced work. Post Covid, the studios are still struggling with getting things done as well as where things are produced.

The most recent Spider-Man was not produced in the U.S. but in Scotland. California and Georgia even with tax credits are too expensive. Manitoba has perhaps the top tax credit in the world and subsequently has attracted Little House on the Prairie to film here. While Winnipeg does have a number of creatives who produce TV and film, a huge chunk comes from U.S. studios. Little House is a Netflix program. As such, the merger of studios can and will have a large impact on Canada to the tune of hundreds of millions a year or more.

Warner Bros shoots so many shows in Canada and has so many broadcast deals in Canada that is hard to imagine what would have happen if business was interrupted or brought in house such as HBO, a Warner station. HBO is part of CTV's Crave streaming. That would be Game of Thrones franchise suddenly off the network.

Europe and Britain have just approved the merger but Canada has still not weighed in. And in the U.S, many states have gone to court to stop it. If Crave collapses because HBO moves to Paramount+, it could harm Canadian productions such as Letterkenny and Heated Rivalry. Many American unions are against and might only be mollified with four series and two movies a year in California a year.

Truth be told, Warner and Paramount together probably shoot far more in Canada with various movies, TV series and games than they do in California. For example, Star Trek franchises shoot in Toronto for Paramount. For The Arrow and it's universe, they shoot in Vancouver for Warner. In terms of gaming, Warner works out of Montreal. In short, the entertainment industry has big operations in Canada to the term of hundreds of millions. And while this doesn't necessarily help with the creation of Canadian content, it can contribute to buyers of Canadian content.

The worry in Canada's broadcast and cable industry is that if the the combined studio brings everything in house that it mean Discovery programming from Warner will no longer be available on those two platforms. Likewise, Paramount programming like Star Trek will be brought in house to streaming and it could kill cable channels Like CTV Sci-Fi.

In terms of news, CNN is respected in Canada and if the merger hurts them, at least Canada has CBC and CTV news outlets. It hurts the Americans more than it hurts Canadians if the station is degraded. In the U.S., there is huge concern CNN will be pillaged and turned into a FOX-like network. This is more a U.S. problem than a Canadian one. It should be mentioned that CNN is generally looked upon well in Canada.

Canada should be concerned about American studio mergers and concentration but ultimately, they will likely go along with the British and Europe in approving the takeover. Despite concerns of media concentration, suspect overseas ownership and political bias, it is up to Americans to decide if this is what they want. Many don't. And California is particularly affronted by a merger they are convinced it is bad for the state. 

Even with tax incentives, Los Angeles likely won't be happy with this merger as it is so highly indebted and foreign funded, that it can only be paid for by big cuts and likely price increases that hurt the industry. As for Canada, the industry still offers the best price, locations and skill to attract film and TV crews. And more frequently, shows it can create Canadian content the world wants to see. The trick will to make sure we still have venues, streaming sites and studios wanting to buy.