The debt-laden $111 billion merger is set to close Oct. 6 after a federal judge signed off on Paramount’s settlement of the antitrust lawsuit filed by 12 states in July.
Under that deal, the company has strict obligations for movies and for theatrical exhibition. The combined company is legally obligated to release at least 30 films theatrically in each of its first two years and 32 a year in years three through five, with a 45-day theatrical window for wide releases and a 90-day hold before they reach subscription streaming. Paramount has also committed an additional $300 million a year, or $1.5 billion over five years, to U.S. film production.
That last pledge matters for Europe, which has become one of Hollywood’s busiest production hubs and where the merger got antitrust approvals faster than in the U.S. The question that showbiz insiders are asking in the U.S. is the same for Europe’s industry heavyweights: Can Ellison keep the promises he has made to filmmakers, producers and exhibitors on both sides of the Atlantic if those commitments collide with the $79 billion in debt that the company will shoulder following the blockbuster deal.
Pierre-Antoine Capton, co-founder and chairman of Mediawan, one of Europe’s top production powerhouses and biggest consolidators, believes Ellison’s commitments will hold.
“In Europe, we’ve also entered a period of intense consolidation. Obviously, a transaction of this size is going to involve synergies, but having spoken with David, I believe his vision is first and foremost an artistic, creative ambition,” Capton tells Variety. “He wants to build a more powerful group in order to invest in creation, and it’s not only about making cuts. So I believe in his commitment to cinema and to theatrical releases.”
As the head of a vast production group including North Road, Plan B and See-Saw Films, Capton is also optimistic about what belt-tightening will mean for commissions.
“You can obviously rationalize structures while keeping, and even increasing, your creative ambition. That’s what we’re trying to do at Mediawan, on a much smaller scale. I think everywhere in the world we’re entering a much more difficult phase, where consolidation will be, in my view, one of the solutions to the economic problems we’re all going to face,” Capton says. He added that he sees opportunity for a strong independents like Mediawan to offset the U.S. media behemoths, especially in territories where they don’t have boots on the ground.
Ellison had been able to garner support from across Europe since he went on a lobbying mission on behalf of the merger at the start of the year, meeting political leaders and entertainment figures in France, Germany and the U.K. to rally support for his unsolicited takeover bid. Weeks later, he sent an open letter to the creative community pledging that the combined Paramount and Warner Bros. will release 30 movies a year in theaters.
But not everyone in Europe, however, is convinced the business will survive intact. Prominent Italian production executive Marco Chimenz, former president of the European Producers Club, is skeptical.
“Though Ellison has promised that the number of films the studios will produce will stay the same, if not grow, I doubt that’s going to happen, the same way it didn’t happen when Disney merged with Fox,” Chimenz says. “I think that a contraction in the combined number of films from Paramount and Warner Bros. is in order, and this will certainly be true when it comes to mid-budget films that will increasingly be destined straight to streaming or straight to television.”
On television, though, Chimenz is more hopeful and believes the “impact of the merger might end up being positive in Italy and other European countries with respect to the business of commissioning TV series.” Paramount has not been very active in the international co-productions arena but HBO has. “HBO is playing an interesting role in the production of originals right now,” he says.
As many producers and talents are hoping to see HBO even more engaged, Chimenz wonders whether “the merger, once it’s finished, will prompt the combined entity to invest more in local productions.”
The first reason, he says, “is that local audiences really love local productions, but also to fully comply with the rules determining investment in local content. So I hope that the result in this specific area will be positive.”
The bigger worry for Europe may be physical production. Media analyst François Godard believes the merger, combined with the new U.S. federal tax credit, will mean that “Hollywood productions will move away from Europe, Canada and Australia and go back to shooting in the U.S., and specifically California.”
That would hit hardest in Britain, where Warner Bros. shoots everything from the upcoming “Harry Potter” TV series to its DC movie tentpoles at Leavesden Studios. But U.K. exhibitors and producers are still confident the country has a strong enough track record and incentives and enough other perks to keep luring big Hollywood shoots.
“We have such a thriving industry here, with so many experts, so many skills,” says Clare Binns, BAFTA-winning creative director of Picturehouse Cinemas. “People want to shoot here and I don’t think that’s going to go away. We’ve set ourselves up. Obviously, there’s always risk, but I think we’re in a good position.”
Tim Richards, CEO of exhibition giant Vue and former chair of the BFI, agrees. “From the U.K. perspective, we have one of the best, most highly trained skill sets for filmmakers in the world. And we’ve got a great place to live. We’re a great place to shoot films. We’ve got the infrastructure built up and we’ve got a very attractive tax credit. So we’re not going to lose everything,” Richards says.
Some knock-on effects in sports are also expected. Paramount+ is set to launch the Champions League in the U.K. and Germany in September of next year, but WBD already co-owns TNT Sports with BT. “Now they have the same ownership as TNT,” Godard says. “So they must settle something with BT to take over TNT and merge TNT with Paramount+. They will also have to reconfigure their sports offering in Germany.”
When it comes to cinemas, however, Godard is upbeat.
“My feeling is that everybody’s interests are aligned in trying to relaunch theatrical exhibition. If you start squeezing out some films, you just undermine the ecosystem,” Godard says. “When you have big market share, at some point you find yourself tempted to leverage it, because if you have two big films to release and you want the best exposure, conflicts may arise. But the exhibition industry is very well organized, and I think they will draw a red flag if something happens.”
Vue’s Richards, who was highly critical of Netflix’s efforts to buy Warner Bros. earlier this year, points to Ellison’s record at Paramount. “From a credibility standpoint, you look at what David Ellison has already done at Paramount, which had a run rate of seven to eight films a year and this year are going to be releasing 15 movies,” he says. “And that was before Warner Bros. was even on the horizon. You’re dealing with proper filmmakers and businessmen and not just businessmen. And that’s the difference.”
Picturehouse’s Binns is also prepared to take Ellison at his word, but she argues the number of films is only half the story.
“I would hope if he said that, then I would expect him to deliver that. But it’s not just the 30 movies. It’s what those 30 movies are. It’s what those hires are. It’s what he is now going to [do about] the breadth and range of films that I think everybody wants to see,” says Binns. “I think all the production in the U.K., big and small, will want to feel that there’s someone at the helm that is interested in the long-term survival of this industry, which means taking risks.”
Binns raises the concern that Paramount may take a conservative approach to greenlights. She’ll be watching for the genres and the filmmakers that the new-model Paramount and Warner Bros. embrace.
“The concern is who he’s going to be hiring,” says Binns. “He’s made one major hire, Ynon Kreiz, from Mattel. We just need to make sure that the hires are going to be reflective of what’s going on at the moment. If we’re just going to have white men doing their thing, that is just something that rings a bit of an alarm bell to me. And what we need is range.
“We need the Danny Boyle films, we need the ‘One Battle After Another,’ as well as we need the big franchise movies,” Binns says. “If he makes 30 movies a year, that will be great. But it will be even better if he makes films that cover a broad range of tastes and what is actually reflective of a very exciting industry with lots of new voices.” %!s()
