Paramount Assures Regulators Deal With Warner Bros Discovery Will Support Theaters

Paramount has written to California officials to address concerns that its planned acquisition of Warner Bros Discovery, which includes the HBO streaming service, could harm movie theaters. “Theaters will continue to be an essential part of the moviemaking business and social fabric,” the company’s legal chief wrote in a letter sent last week.

” The correspondence was sent ahead of a Monday press briefing in which the state attorney general left open the possibility of filing suit to block the transaction. “There are red flags everywhere for us,” the attorney general said, citing potential effects such as higher prices, lower wages, fewer jobs, less quality, less choice and less competition.

Background on the Proposed Merger The combination would create a larger competitor to existing streaming services. Paramount has argued to shareholders, the Warner Bros Discovery board and federal officials that the merged company would be better positioned against larger rivals.

The company’s letter sought to distinguish the deal from the earlier combination of Disney and 21st Century Fox. It noted that Disney had already begun reducing theatrical releases before that acquisition, whereas Paramount has increased its theatrical output and committed to distributing more than 30 feature films annually after the merger.

The letter also pointed out that the Disney-Fox transaction was driven in part by desires to gain full control of Hulu and additional intellectual property for theme parks, objectives that do not apply to the current proposal.

California officials have signaled close scrutiny of the transaction. The attorney general’s office did not immediately return a request for comment after the briefing. Hollywood talent and unions have expressed worries that consolidation could lead to fewer theatrical releases, reduced employment opportunities and lower compensation.

The earlier Disney-Fox deal resulted in fewer movies reaching theaters, according to critics of further industry consolidation. Paramount’s challenge now includes persuading creative workers and state regulators that the merger will not produce those outcomes.

The company maintains that its incentives align with continued support for theatrical distribution worldwide.