Hollywood may not be dead after all, if a proposed $110 billion mega-merger of Paramount Pictures and Warner Bros Discovery goes through.
A new report from the California Policy Center suggests that the merger between the two huge studios could mean 40,000 jobs and provide a “boost to the industry” equal to billions of dollars.
The merger would combine Hollywood studios Paramount Pictures and Warner Bros., streaming services Paramount+ and HBO Max and news outlets CNN and CBS, among others.
In a letter to Congress, Paramount-Skydance CEO David Ellison promised that both studios, Paramount and Warner, would make 15 movies each every year.
“My promise to you is to build a stronger Hollywood, by keeping both of these legacy studios operating separately, thereby preserving and potentially increasing jobs.,” Ellison said.
In contrast, when major studios have merged in the past they have shrunk in size, the report noted. However, Ellison is promising the opposite.
“A post-merger slate of 30 films would be a 50% increase on their recent output and represent a 14% increase in the total output of the big five studios,” the report read.
This promise could also generate $660 million a year on production.
“Assuming an average movie industry wage approximates to some $100,000 a year, we can estimate that this movie slate will generate 6,600 production jobs a year,” it read.
If this holds true, additional jobs created for every project could be a boost of tens of thousands of jobs.
“Our analysis finds that this commitment, if fulfilled, could add almost $1 billion to Hollywood’s annual investment in movie production,” Jeff Ferry, the economist behind the study, wrote.
“Paramount-Skydance would account for some 40,000 jobs in production and related industries.”
The report pointed out that the biggest killer of the movie business has been the drop in movie theater revenue as more people are staying home and catching flicks on streaming sites.
“Ticket sales have fallen by 46% since 2000 as more Americans have opted to stay home and enjoy entertainment on their own TVs, laptops or phones,” the report read.
“The period up to 2022 (excluding the pandemic year of 2020) is now referred to as the era of ‘peak content,’” Ferry said. “As that period unwound, Hollywood production studios laid off workers and cut back on output.”
The report also said that Ellison’s promise to maintain a “45-day theatrical ‘window’ for all of Paramount-Warner releases is a significant development for the struggling theater industry.”
And the impact locally in Los Angeles could be huge.
The report noted that a recent study from the Los Angeles County Economic Development Corporation “found that the entertainment industry contributes $115 billion to the regional economy annually, and accounts for 681,000 jobs in the county.”
It said the average annual income for a worker in the entertainment field is $165,798, a year, so 30 movies being made could “provide a significant boost to LA County.”
Critics of the merger say Ellison, at 43-years-old, is “too inexperienced to run one of Hollywood’s largest studios,” the report noted.
Last year, Gov. Gavin Newsom expanded California’s film production tax credit in an attempt to turn the industry around and help the struggling film and TV business in LA.
Newsom recently announced “38 new film projects have been awarded participation in the tax credit program,” the report noted.
“The state expects this to deliver $800 million in additional economic activity.”
In conclusion, the report said this deal “would create a new, enlarged entertainment company that includes movie studios, video streaming services, cable networks.”
“It would address the rise of the Internet and home entertainment with a new larger production house backed by billions of dollars of fresh private capital.”
The Post reached out to several movie and film industry groups for further comment.
