How Will the Paramount-Skydance Merger Affect You?
By Movieguide® Contributor
Paramount’s merger with Skydance is causing concern for some theater owners who fear that greater consolidation within the industry will lead to a lower output of movies.
“A merger that results in fewer movies being produced will not only hurt consumers and result in less revenue, but negatively impact people who work in all sectors of this great industry — creative, distribution and exhibition,” said Michael O’Leary, president and CEO of the National Association of Theatre Owners (NATO).
“Merger-phobia is a result of the concerns that theater owners have over the effect that a diminishing number of films in the marketplace has on their bottom line,” added Paul Dergarabedian, a senior media analyst at Comscore. “It’s all about the product and a robust pipeline of big screen offerings keeps the industry humming along and ensures momentum, which is key to success at the multiplex.”
This concern is not unwarranted. Before Disney and 20th Century Fox merged in 2019, both studios released approximately a dozen movies a year. In the four years since, the combined studios have released roughly a dozen movies a year, effectively cutting their production in half.
The Paramount-Skydance merger, however, might offer a different future, particularly because Skydance is not a major studio. While Skydance is a strong production company, it only releases an average of three to four movies a year, many of which are in conjunction with Paramount, meaning a fall in production would have a negligible impact on the industry.
In fact, Skydance’s acquisition of Paramount may prove to be the best-case scenario as it blocks a merger from other major studios, such as Warner Bros. Discovery, which could have led to a situation that more closely resembled Disney and 20th Century Fox.
Furthermore, those leading the charge in the merger are highlighting the increased firepower that Paramount will have after the merger, especially in the realm of animation as Skydance Animation and Nickelodeon fall under the same roof.
“From a theatrical perspective, animation is so important and Paramount is very strong with Nickelodeon,” said former NBCUniversal CEO Jeff Shell, who is expected to become the president of Paramount following the merger. “We’re going to immediately be a leader in animation.”
Nonetheless, the deal will only benefit the theater industry if it leads to, at the very least, a level output, if not an increased output. The first half of 2024 illustrates how theaters struggle when they don’t receive a steady stream of new releases.
Heading into June, the domestic box office had only grossed roughly $2.5 billion. While March began to heat up the box office with the release of DUNE: PART TWO and KUNG FU PANDA 4, these movies still underperformed due to zero momentum at the box office coming in. These movies, however, have served as strong catalysts for a strong $965 million gross in June and a strong start to July with $328 million rolling in after less than two weeks.
“The entire industry will be closely following how Skydance and Paramount’s release slate evolves in the coming years,” said Shawn Robbins, founder and owner of Box Office Theory. “I think it’s fair to say there’s cautious optimism right now. It’s a different situation than if another major studio stepped in to acquire Paramount, which would have more likely cannibalized the output of theatrical content to a significant extent. Nothing is certain right now.”
Movieguide® previously reported:
Skydance Media’s acquisition of Paramount was approved on Sunday; the companies have since revealed their vision for a shared future.
The largest immediate impact that would come from the merger would be a $1.5 billion cash infusion to help the struggling studio stabilize, allowing top talent and creatives to feel comfortable signing onto new projects from the studio. Luring these high-quality individuals sits at the center of the company’s plan for the future.
“[Paramount] will be a premier, creative-first destination for storytellers, dedicated to top-quality content and will be positioned to improve profitability, foster stability and independence for creators, and enable more investment in growth areas,” the companies said.
While building on the longstanding legacy of Paramount, Skydance will look to incorporate its specialty as well, helping the company overhaul its technology to become an industry leader in the space.
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