As the proposed merger between Warner Bros. Discovery Inc. and Paramount Skydance Corp. basks with shareholder approval and awaits final approval, speculations abound about the future of the new pair.
Snatched from Netflix Inc. by Paramount after a prolonged bidding war, the $110 billion merger agreement is now facing close regulatory scrutiny in major markets. Despite Paramount Chief Executive David Ellison’s proclaimed confidence in sailing through regulatory challenges with ease across international trading floors, Democratic lawmakers have been pushing back with antitrust violation claims. That includes California state Attorney General Rob Bonta, who intends “vigorous” investigations into the merger.
“As the epicenter of the entertainment industry, California has a special interest in protecting competition,” Bonta posted on X in late February. “Paramount/Warner Bros. is not a done deal.”
The market is also showing concern about the road ahead, says Court Stroud, a professor of integrated marketing at New York University. Warner Bros. Discovery closed out at $27.32 per share on April 2, a 3% drop from Feb. 27 when the deal was announced.
“It is not certain that it’s going to be approved. I’ve seen some estimates that say it’s 90% likely to be approved, but the market is not pricing it that way,” Stroud says. “The stock price is about $4 below the $31 deal price. That’s a reflection that people are uncertain about the regulatory hurdles.”
The U.S. Department of Justice also sent subpoenas to further investigate the acquisition late March, according to Reuters. Key issues in contention are the impact on studio output, content rights, the movie theater business and streaming services competition. In an Instagram post, Senator Elizabeth Warren of Massachusetts has called the merger “an antitrust nightmare,” warning that it could mean fewer choices and a higher price tag for consumers.
Paramount is already planning to combine its streaming service, Paramount+, with HBO Max after the merger, said David Ellison on an investor call on March 2. With global streaming subscription revenue boiling over $150 billion for the first time last year – according to data from London-based research firm Ampere Analysis via the Hollywood Reporter – the legal battles will test Paramount’s determination to cut its piece in the enormous pie. Ellison seemed confident that his company would prevail.
“We think the combined offering, given the amount of content and what we can do from the tech side, really will put us in the position to be able to compete with the most scaled players in (direct-to-consumer offerings),” he said during a call with analysts in early March.
A nightmare on the balance sheet
The acquisition is expensive, even for established studios like Paramount. Since the bidding war broke out last September, Paramount boosted its price at least 10 times from $19 a share to $31 a share to swipe the deal from Netflix. It also agreed to pay billions of termination fees, pulled in foreign investors and promised personal guarantees from David Ellison’s father, Oracle founder and multibillionaire Larry Ellison, to sweeten the deal. Currently valued at more than $10.5 billion by market cap, Paramount is trying to take on a company worth nearly $69 billion.
Many are concerned that it is biting off more than it can chew, especially when the combined entity will inherit the financial burdens of Warner Bros. Discovery, who wrapped up last year with $29 billion in debt. Combined, the debt load is projected to reach $79 billion, marking the merged entity one of the most leveraged media companies in history, according to Deadline. To pay off the debt means securing a large and steady cash flow. The entertainment industry is seeing a resurgence of reboots using existing intellectual property, including Warner Bros. Discovery’s upcoming “Harry Potter” series, LuckyChap Entertainment’s “Wuthering Heights” and DreamWorks’ live adaption of “How to Train Your Dragon.”
The remake model is working – 13 out of the 30 most-watched titles on streaming in the U.S. in 2024 came from existing intellectual property, reported The Observer. The global intellectual property in media and entertainment was valued close to $179 billion in 2025 and likely reaching $300 billion by 2035, according to WiseGuy Reports, a market research firm based in India.
Paramount is not blind to the trend, as a potential new owner of Warner Bros. Discovery’s extensive intellectual property reservoir. Its peers have chosen the less risky route that appeals to familiar ideas over original content, and the combined entity may choose a similar safe way out of its red inked balance sheet, Stroud says.
“I think what will happen is (when) Paramount Skydance (takes) over, the combined entity will take what they think is the safest route to make money, using the IP that already exists and trying to capitalize on it,” Stroud says.
Recent Paramount films include multiple iterations of its most popular franchises, including “Mission: Impossible – The Final Reckoning,” “The Naked Gun” reboot, “Transformers One” and “Scream 7.”
A leaf from the books of Disney
Intellectual property can overspill to physical merchandise and live experiences beyond the screen, at the same time. Bringing together two major production houses with significant real estate holdings in L.A.’s prime entertainment zones, the combined entity will sit on a vast reserve of soundstages beyond the enormous intellectual property library. Paramount holds the oldest operating film studio in L.A., and Warner Bros. Discovery’s famed water tower is a must-see stop for tourists.
The Los Angeles Times reported in March that should the merger come to pass, Paramount’s current plan is to keep both historic lots operational, in line with its goal to produce 30 films a year. The end goal is to consolidate studio work around the Warner Bros. Discovery lot in Burbank, according to people close to David Ellison. Paramount’s famed studio – too old to be demolished – will be leased out for film productions and may host some retail space or commercial offices.
Some have doubts, however. The studios sit on valuable land, and Paramount needs the cash. Jonathan Handel, an entertainment lawyer at Feig Finkel, says it remains to be seen how long the plan remains valid.
“Paramount is saying that they will be keeping both lots, and they won’t be selling one of the lots,” Handel says. “But two years from now that promise goes stale, and whatever the highest or best use is at that time is what they are doing.”
If the company wants to forge a path forward that balances financial viability and sustaining historical legacy, one way to do it is rebranding one of the historic lots to capitalize on its fan-favorites, said Stroud. Theme parks, for instance, is one of the ways for Paramount to pull itself up by the bootstrap. Stroud suggests Paramount might take a leaf from the books of The Walt Disney Co. and Comcast Corp. – both proficient players in theme park operations and merchandising.
Last year, Disney closed out with over $10 billion in revenue from its parks, cruise ships, hotels and merchandise business – the highest on record in the company’s century-old history. That includes $3.3 billion of operating income, representing a 6% jump year-over-year and 71% of total operating profits for the fourth quarter. Comcast also saw significant growth in theme parks revenue, which increased 22% at $2.89 billion from October to December last year, with pre-EBITDA earnings rising over $1 billion for the first time.
“They say that imitation is the most sincere form of flattery,” Stroud says. “Well, if you’re trying to figure out how to make money, why not look at your competitors and see, is there something they’re doing that we’re not, like having theme parks or some sort of tours that would allow a quick infusion of cash?”
Paramount may already be thinking ahead of the curve. It is not a stranger to the theme park business, after all: the entertainment company had five theme parks across the nation in the ’90s before selling them to Cedar Fair for $1.24 billion in 2006. In 2022, it also signed a $1 billion development deal to build a “Disneyland level” theme park in Bali, Indonesia. By 2030, its collaboration with Korean retail company Shinsegae Group will bring about a Paramount intellectual property-infused resort in Hwaseong, South Korea, possibly including attractions based on “Star Trek,” “Top Gun” or Nickelodeon television series.
Domestically, the company hired Mattel and Disney veteran Josh Silverman to head its global productions and experiences department last October, whose responsibilities span consumer products, live experiences, publishing and e-commerce. To join ranks with Disney and Comcast, Paramount may be looking to expand its theme park business going forward – and whichever L.A. lot it chose, it will likely be a massive tourist magnet.
“Now we were talking about Paramount and Warner Brothers, but you can’t not think about Disney and NBC Universal, both of which have taken the idea of studios and properties and turned them into opportunities to get consumers to come in, and have done so in a very lucrative way,” Stroud says.
Jonathan Jones, a spokesperson from the City of Burbank, says that any new owner of Warner Bros. Discovery’s historic lot will be subjected to the same regulations as the company and would be able to build out the planned development
land-use entitlements. He added that while the city cannot speculate on potential decisions from the combined entity, the city will continue to focus on “supporting local jobs,
long-term economic stability, and a strong business environment for the entertainment and creative sectors” pending regulatory approvals.
Neither Warner Bros. Discovery nor Paramount Skydance replied to a request for comment.
Protecting Hollywood jobs
While the deal struggles through the antitrust examination, it is already leaving an economic footprint. Though nothing big will happen to the historic lots soon, Hollywood talents may have already started considering next steps ahead of potential mass layoffs, Handel says.
“Here’d be a thinning of business and legal affairs, and much greater thinning of accounting,” Handel says.
The question has already been put to Ellison by local lawmakers, including Burbank-based Sen. Adam Schiff and Glendale-based Rep. Laura Friedman, who previously co-produced “It Takes Two” before entering politics. In a letter obtained by the Hollywood Reporter, the executive addresses the lawmakers’ questions on how he plans to keep Hollywood and California central to Paramount’s production and investment strategies, and “preserve and expand” good-paying local jobs.
“I firmly believe that uniting Paramount and Warner Bros. Discovery presents a unique opportunity to build a true champion for the creative community,” Ellison writes in the letter. “One that can and will bring more stories to life, support filmmakers and talent with real scale, and compete effectively on the global stage as an independent media leader.”
In an effort to probe deeper, the L.A. County has commissioned a study on the seismic impacts of the megamerger under the Department of Economic Opportunity
in March.
“Thousands of families rely on this industry for their livelihoods, and we must protect their jobs and our signature industry,” says Supervisor Lindsey P. Horvath. “As the proposed merger moves forward, we need a clear understanding of its impacts on jobs, competition, and the future of storytelling. Today, we took action to support workers, strengthen our local economy, and keep Los Angeles at the center of the global entertainment industry.”
The impacts under the scope include direct, indirect and induced employment. The department will report back to the county board of supervisors in 120 days with final findings and recommendations. It will also establish workforce programs to support the industry and submit formal comments to the U.S. Department of Justice about potential antitrust violations.
Award-winning actress Jane Fonda, who championed against the merger between Warner Bros. Discovery and both Paramount and Netflix, stands with the county about the probe.
“Los Angeles runs on the creativity and hard work of the people behind our entertainment industry,” says Fonda in a statement. “As this acquisition moves forward, we need to make sure workers and storytellers aren’t left behind.”
