Paramount Is Trying To Blame Netflix For All The Negative Merger Press

Overhype

from the nothing-is-my-fault dept

More than 4,000 Hollywood insiders recently signed a letter blasting Paramount’s planned $111 billion merger with Warner Brothers, noting that the massive consolidation will be very harmful to labor, consumers, and creatives.

As we saw with the AT&T Warner deal, history generally supports this; these debt-riddled deals are broadly, uniformly harmful. Companies that take on this kind of debt always try to address it by cutting corners, raising prices, and firing thousands of people. With the debt from both the CBS and Warner deals (and over-leverage into AI), the Ellison’s media buying spree has the potential to be extra ugly.

Amusingly, as they gun for regulatory approval, the Ellisons are apparently trying to circulate the claim that all of the recent negative press about the merger is somehow Netflix’s fault. Paramount insiders have been trying to seed the idea in outlets like Puck News that the Hollywood campaign is some sort of Netflix op:

“But I’m also hearing that there’s some suspicion inside Paramount and beyond that Netflix is astroturfing the glitzy campaign as a way to either delay the deal—remember, the Ellisons have to pay WBD shareholders a ticking fee of roughly $650 million per quarter if the closing drags past September 30—or kill it outright.”

There’s absolutely no evidence this is actually true. The organizers of the letter, including Democracy Defenders Fund (which denied any Netflix involvement to Puck), the Committee for the First Amendment, and the Future Film Coalition, are opposing it because it will be a labor bloodbath for an already reeling Hollywood.

Puck goes on to note that Netflix is hiring policy folks to oppose the deal as it faces regulatory approval challenges (most likely among state AGs), but that’s not particularly surprising:

“So is this groundswell as organic as it looks? The Democracy Defenders Fund, run by veteran Washington operative Norm Eisen, strenuously denies that Netflix is meddling backstage—and Netflix also insists it has nothing to do with the letter or protest. That said, I’ve heard Netflix has been quietly shopping for public affairs operatives to help oppose the deal, and has retained economist Nicholas Hill—a former D.O.J. Antitrust Division official who testified for the plaintiffs in the Live Nation trial—to engage with regulators about the Paramount–WBD merger.”

You’ll recall that Netflix’s $82.7 billion offer was beaten out by Paramount’s $111 billion proposal.

No mergers would have been the ideal outcome in a country with functional antitrust enforcement. If you had to choose one, the Netflix offer was likely the better one for Hollywood.

Netflix and Warner Brothers had far less structural redundancies, which likely meant fewer overall layoffs. Netflix was willing to pay mostly cash, whereas Paramount is backing the deal with a bunch of Saudi and Chinese investment, which raises influence concerns. Oh, and Larry Ellison has been an open and enthusiastic supporter of authoritarianism.

That said, if history is any indication, Netflix doesn’t have to do much of anything. There’s serious potential this could make stuff like Yahoo, Tumblr, or Quibi seem extremely competent.

Every Warner Brothers transaction to date has been a disaster, and there’s very little indication this deal will be any exception. Should Paramount executives stumble in execution to remain competitive and manage the debt load (and there’s very good evidence to suggest that’s already happening), all Netflix has to do is sit back, watch Paramount/Warner collapse, then buy it for half the price (or less) a few years from now.

Filed Under: astroturfing, consolidation, hollywood, layoffs, media, mergers, streaming, tv, video
Companies: netflix, paramount