STITCHED TOGETHER

The biggest downside of the Paramount Skydance and Warner Bros. Discovery merger is consolidation. Two huge Hollywood employers become one, with obvious overlap in marketing, advertising, streaming, technology, corporate staff and production support. Paramount is targeting at least $6 billion in cost savings, so significant layoffs and department consolidation are expected. An LA County report put nearly 2,500 local jobs at risk, with further effects on vendors and the small businesses that support production.

For the people who make entertainment advertising, the bigger concern may be fewer buyers, not fewer movies. Paramount and Warner Bros. currently run separate marketing departments, agency relationships and freelance and vendor rosters. Once combined, there is a strong incentive to consolidate them. The same amount of entertainment could be produced while fewer agencies, designers, photographers, finishers and outside vendors divide up the work. Creative workers also have one fewer major studio to take their services to.

The other major concerns are debt and competition. The combined company is expected to carry around $80 billion in debt, which keeps the pressure on to cut expenses even after the obvious duplicate jobs disappear. Hollywood also loses another independent major studio and distributor, putting more movies, TV networks and streaming content under one company. The settlement with state attorneys general is meant to soften that, with commitments to release at least 30 theatrical films a year and to spend at least $300 million a year on domestic production. The fundamental downside remains: fewer major Hollywood companies control more of the business, while under enormous pressure to cut costs.