Just days before the lawsuit was settled, the attorneys talked about the impact the litigation had on other transactions — and the talk it has generated about the future of Hollywood.
Courtney Braun, chief legal officer for WME Group, said that the focus on the massive transaction has triggered many conversations about the future of Hollywood production, “whether that’s a federal tax credit or whether that’s changes to the California tax credit, or even introducing a modified fin-syn.”
She added during a panel at Deadline‘s inaugural L.A. Law Summit: “It’s our clients, and then it’s people who might not have otherwise been in these conversations before are starting to think about, ‘How do we keep jobs in the U.S.? How do we keep jobs in California?’ And then is there another ecosystem that we might want to create that looks maybe like the ecosystem of in the ’70s, when [there was] the first fin-syn. Is there something now that we need to do to think about changes in ownership and distribution and how everything is vertically integrated.”
“Fin-syn,” or the Financial Interest and Syndication Rules, were the set of FCC regulations that restricted broadcast networks from owning primetime shows. They were repealed more than 30 years ago, with many content creators lamenting the wave of consolidation ever since. There has been talk of reviving the rules for the streaming era, with the idea that it would spur competition and boost independent production.
RELATED: Courtney A. Kemp Tells Deadline’s L.A. Law Summit What’s The Biggest IP Challenge Creators Face; ‘Power’ & ‘Nemesis’ EP Says “Protect The Chain Of Custody”
Said Cathleen Green, partner at Stubbs, Alderton & Markiles LLP: “We’ve already seen an impact just over the years in terms of what shows are getting funded, produced and picked up. So the fear, I think, is naturally that if this happens, there may be less of that because of the consolidation.”
What’s unclear is the Writers Guild of America’s willingness to file a lawsuit to block the merger means a more aggressive approach by labor to future mergers. Green said that a real concern is that there will be “not only less jobs to the union members but less lucrative deals because of the consolidation.”
“I don’t think that we really know yet,” she said. “Paramount has taken the position that won’t be the case and that ultimately, it will just be a healthier company with Warner Bros., together in the market. And they’re saying, ‘We’ll still buy. Maybe we will buy more because we’ll be healthier.’ But that’s a hard argument to make to people that are used to having more bids come to them, and effectively there will be just one less in that process.”
RELATED: Deadline’s L.A. Law Summit: Nina Shaw & Patricia Glaser Honored On Day Of Big Ideas, Big Insights; Watch The Video Presentations
Braun said that the Paramount situation also might be an indication “that when you are handicapping a deal, it is no longer sufficient just to handicap the DOJ risk. You are not going to have to think about state AGs, you are going to have to think about the guilds as well. It’s just a completely different risk environment.” State attorneys general have challenged not just the Paramount transaction but also Nexstar’s acquisition of Tegna.
Carrie Casselman, co-leader of the media & entertainment industry group at Davis Wright Tremaine LLP, said during the panel: “I think we’re in an era where the question of ‘Who owns it and does it matter?’ is on everyone’s mind in different ways, and I think there’s three key touch points for that. It might matter from an antitrust perspective, which is a lot of what we are talking about. It might matter from an editorial perspective, which has certainly been part of the conversation about Paramount and Warner Bros. And it might matter from a political perspective, which is a little bit where we were with TikTok. And people fall into different sides of the degree to which it will, in fact, impact production cycles.”
RELATED: Paramount Settlement Terms Laid Out By CA AG Rob Bonta, Who Says Deal Is “Not A Blessing” Of WBD Merger
She added, “That’s a larger conversation about what is the landscape that we’re all going to be working in five, 10 years from now, and how that is going to impact not just our jobs but our society more broadly.”
Charles King, founder and CEO of Macro, recently announced the acquisition of AllBlk, the direct-to-consumer streaming service, from AMC Global Media.
Given the consolidation and changes in the business, King said: “There’s going to be new opportunity to acquire assets that are going to be spun out. There’s shifts in the marketplace. I think we all are seeing what is happening around creator economy. There’s been a tremendous amount of M&A activity in that space as well.”
He said that in the case of Macro’s acquisition of AllBlk, “what we saw was an opportunity with the larger macro forces that were happening, but also shifts in where audiences are going. So when you think about a specialty platform, how are you actually going to build out your programming slate?”
Citing Netflix and myCast deals and others in the creator economy, he said that there would be plenty of ways to integrate opportunities there for new platforms.
“Everyone in our business, from artists to executives to people running companies, the major studios, everyone is … inputting that data and then thinking about what is the most thoughtful way to navigate through it, including for everyone AI,” he said.
The panel also commented on the alternatives to mergers: strategic partnerships and joint ventures. Green said that such arrangements are “very attractive, especially in the mid-market. So I don’t think you will necessarily see less of that. I think you’re going to see more of that.”
She added: “There are naturally less of some of the traditional overhead deals out there from production companies. So we are seeing a lot of smaller production companies being set up with a third-party financier outside of the traditional studio system, and they are just going forward with a slate of projects and kind of seeing how that works over, say, three to five years. And we are seeing it from producers who have had success, and also talent and actors who want to run their own production companies, but just aren’t getting the traditional financing from the studios.”
While much of the media attention has been on major studios, a trend in M&A has been consolidation in the influencer space and in influencer management.
“It’s a very lucrative business model,” Green said. “They act as managers of the creators, and the creators are making content that only is becoming more widely spread and valuable.”
Casselman noted that there is a “cycle of music deals and buying revenue streams and catalogs and consolidating those portfolios. That’s happening in other parts of the business now. … There are other stable long-term revenues in publishing, in live stage, and there’s some structuring and some activity around those.”
King noted the interest around live events and experiences companies.
“I think there will be more opportunities there when you think about things that can be AI-proofed,” he said. “People want to convene together. They want to spent more time together. Clearly we are seeing it in sports, but anything around live events and people coming together in experiences.”
Deadline’s inaugural L.A. Law Summit was sponsored by Blank Rome LLP, Davis Wright Tremaine LLP, Greenberg Glusker LLP, Del Shaw Moonves Tanaka Finkelstein Lezcano Bobb & Dang LLP, Glaser Weil Fink Howard Jordan & Shapiro LLP, and Stubbs Alderton & Markiles LLP.
Get our Breaking News Alerts and Keep your inbox happy.
Comments On Deadline Hollywood are monitored. So don't go off topic, don't impersonate anyone, and don't get your facts wrong.
Δdocument.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() );