Studio leadership testified Tuesday that state regulators are demonstrating a fundamental misunderstanding of the entertainment business by expecting two legacy media conglomerates to independently attract audiences.
Executives from Paramount Global and Warner Bros. Discovery testified Tuesday that California's ongoing antitrust scrutiny of their proposed merger is threatening the survival of the entertainment industry by forcing two massive corporations to continue attempting to outperform one another.
In a joint 400-page regulatory filing addressing California Attorney General Rob Bonta, the studios argued that requiring legacy media conglomerates to independently produce films and court subscribers is an outdated, punitive framework. The brief outlined how a combined entity would finally have the market dominance required to stop greenlighting original theatrical releases, consolidate their respective streaming platforms into a single $32-a-month service, and execute a planned reduction in force of roughly 15,000 workers who are currently acting as a drag on shareholder value.
The executives cautioned that the current probe ignores the harsh realities of the modern box office, where relying on consumer choice introduces unacceptable volatility to quarterly earnings.
If the attorney general forces us to remain separate entities, we face the very real threat of having to actually compete for audiences by making better films.
Wall Street analysts largely agreed with the studios' guidance, noting that both companies face severe headwinds if forced to maintain separate, fully staffed production slates. Markets responded positively to the testimony, with shares in both media giants rallying in late afternoon trading after executives confirmed they have already identified four completed, unreleased feature films that will be permanently shelved for tax write-offs the moment the deal clears regulatory hurdles.