EDITORIALS

Discussion: What if Paramount Merged with Sony or Universal?

by
June 15, 2009
Source: Forbes

Sony Pictures - Paramount Pictures - Universal Pictures

This isn't news - it's all a rather crazy claim from a Wall Street investor. But there is a great discussion worth having. In a Forbes article published yesterday, veteran investor Mario Gabelli claims that "Viacom Inc's Paramount Pictures could merge with Sony Pictures, Universal Studios or another movie studio amid a wave of consolidation in the industry over the next few months." It's a very lofty prediction, especially since Paramount is one of the studios who is doing very well right now (and will be doing even better when Transformers 2 opens next week). But the discussion is whether this could be beneficial if it ever happened.

"Today there are seven or eight motion-picture studios. A round of consolidation will occur in the next six to 12 months because of the costs of financing, prints and advertising, the benefits of globalization and such," claims Gabelli. "We hear talk of something going on." Over the last few years, we've seen some big changes in Hollywood, most notably New Line Cinema being merged into Warner Brothers and the elimination / consolidation of indie labels like Paramount Vantage, Picturehouse, and Warner Independent. While all of the studios have been cutting costs, most of them seem to be doing well, with each getting a fair share of big hits. The two studios that seem to be struggling are Lionsgate and The Weinstein Company.

If you look at the box office totals for this year so far, Paramount is ranked right below Warner Brothers as the second most profitable studio - with $740.6 million (and that's not counting the expect $500 million+ that Transformers 2 will probably bring in). They're a great studio, one of the best in Hollywood, and haven't shown any of the signs that other studios show when they seem to be struggling internally. So I don't know why Gabelli thinks they might end up merging with another studio - unless Viacom's owner Sumner Redstone is really worried about their financial situation. But even that seems a little far-fetched as well.

What is worth discussing, though, is whether this would be at all beneficial to anyone in Hollywood - or, more importantly, to the artists or the audience (meaning us). Right off the bat, it doesn't seem like a good idea at all. However, I believe it was a good thing for New Line to merge with Warner Brothers last year - and since then we've seen both studios doing very well. There haven't been as many flops and Warner Brothers has even taken more risks (with movies like Observe and Report and Watchmen). But none of the three studios involved in this - Paramount, Sony, Universal - are doing poorly and need the support of each other. I'd even claim that they're so different from each that it would be a disaster to bring them together.

So is there any benefit for a huge merger like this? Or is it all about making sure Sumner Redstone's bank account stays full? The argument that I ended up getting in on Twitter focused on the idea that fewer studios and/or fewer people working in Hollywood would instantly mean bad things - less good movies, less movies in general, and so on. There is obviously more to that side of the argument, but I also feel like that is a hasty conclusion to jump to right off the bat. I don't think a Paramount merger would be good at all, but do more studios in Hollywood immediately mean better things? I'm not sure it does. What do you think?

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  • d
    I don't think transformers 2 will make more TDK. Universal is probably best.
  • d
    Or like you said, it could be a complete disaster. Can't knock it til you try it.
  • d1rEct
    they should stay in competition not merge
  • LINKFX
    Ummmm...this will never ever happen. Cut throat competition is what keeps Hollywood alive. Who listens to Wall Street anymore, they don't exactly have a shiny track record in their prediction department, now do they? I mean if you think about the bigger picture, every notion they've had in the last 15 years has been basically invalidated by their stupidity over the past 4 years or so.
  • LINKFX
    New Line didn't merge with Warner Bros. btw, Warner Bros. always owned New Line, it was like their ghetto branch...they closed it down and took in their peoples
  • zach
    no merge! less studios less hit movies! just like u said
  • Universal also takes the best movies i have seen .
  • The Clergy Arc
    Warner Brothers and Paramount are kings right now when it comes to who's been delivering good movies along with financial success. Universal has been doing pretty good as well but nowhere near the level the two I mentioned. 20th Century Fox should probably merged with Sony or something as 20th has been releasing the worse of the bunch. Why would Paramount (one of the most successful studios in the business currently with films in development that seem to only guarantee the studio a long stay in this fruitful position) choose to merge with Sony. It doesn't make any sense.
  • Jazz
    your wrong Alex the reason why Warner Brothers is taking risk is because of Legendary Pictures. you mention two movies Observe and Report and Watchmen that been co-produce by Legendary Pictures. if Warner Bros was not with Legendary Pictures you would not have these risky movies.
  • Matt
    Here is an interesting thought... If paramount which distributes for Marvel Studios merged with Sony, Could we all see our favorite webslinger merged into the new Marvel Film Universe? Not sure what the legal aspect of that is but it would be awesome!
  • Good call #9...that would be pretty amazing. Anyone know if there could be any truth in that? I'd love to see Spidey in some Marvel crossovers with Iron Man, Daredevil, Xmen, Thor, Captain America, etc.
  • Less movie studios would pretty much mean less competition among movie studios, which isn't a good thing. I'm sure the quality of movies would go down, but I don't think it would be a drastic drop off. However, if it's between losing a studio completely or having it merged into another, obviously we would prefer the merger.
  • Corran Horn
    Now, if it was Fox merging with Sony, I could see this making sense. Fox has not been doing well, and I get the feeling Rupert Murdoch is itching to cut his losses. If Avatar doesn't save them, then I foresee a merger. But Paramount? Sorry, I just don't see it. They've been doing extremely well these past few years. Why would they want to merge now?
  • It would be a monster for the movie industry. I actually see this happening.
  • If this merger were to actually happen, I would think it would be one of the biggest in history. I could see this merge making some big waves around the world and I think it would be interesting to see what happens if this is the case.

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