Weekly Column: Mergers Signaling Strength of Content, Difficulty in Distribution

In his capacity as a Columnist for California Sports Lawyer®, Founder Jeremy Evans has written a column about the prospective Warner Bros. Discovery and Paramount merger combining two Hollywood and sports empires.  

You can read the full column below.


Content is king. Great content in either entertainment, media, or sports drives people to watch. The problem is that great content, specifically evergreen content that is not news or live sports, needs to find a permanent home and only grows in storage over time as the library expands. In recent weeks, this weekly column covered a story that studios and streamers were moving away from exclusivity and into distribution and licensing partnerships to help solve the issue.

A related dilemma in Hollywood is what studios and streamers would do as the competition gets tougher. Meaning, Amazon, Netflix, and Disney dominate the subscriber numbers and views, but there are a host of other major and mid-major studios that have strong brands with fewer subscribers and thus access to distribution. Studios like Paramount with their streaming arm Paramount+ where there is award-winning content, but not necessarily the subscribers or the content library to compete. Warner Bros. Discovery on the other hand has a large library of very popular content, with more subscribers than Paramount, but with fewer subscribers than the big three, Amazon, Netflix, and Disney. Thus, the prospective merger between Warner Bros. Discovery and Paramount seems like a match made in content heaven projecting the ability to add instant combined content and subscribers that helps strengthen either companies position and also relieves Paramount’s debt.

Lionsgate is taking a similar approach to solving the content and distribution problem by creating a special-purpose acquisition company to raise funds for investment into purchasing other studios and content similar to its deals for Hasbro and 3 Arts Entertainment. The SPAC will be specific to STARZ, the streaming and cable company owned by Lionsgate, but it highlights the need for Hollywood to reach more people to watch their content. There is also the possibility that the SPAC is looking to attract investors for outright purchase in a merger. Something Amazon or Netflix might be interested in doing as they grow their libraries. Amazon notably already has a licensing partnership with STARZ.

Another significant caveat to the current merger business is that companies like Warner Bros. Discovery and Paramount also carry news and live sports programming. The result of a merger would mean that CBS and TNT could be combined to bid on National Basketball Association (NBA) live sports and post-game shows or keep the brands separate. It is of note that Warner and Discovery were also the result of a recent merger.

The role of artificial intelligence will clearly play a role in the future of the content business as the ink is still wet on the major Hollywood union deals for the WGA and SAG-AFTRA. One issue in combined resources is less leverage and fewer places to view content. There is also an issue in fractionalized platforms and paywalls with people have streaming fatigue by being asked to access too many platforms with increasing fees. In the end, people will be forced to choose between platforms unless one platform offers an all-in-one, which has yet to be presented and may never be offered in the current market.


About Jeremy M. Evans:

Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clients in contractual, intellectual property, and dealmaking matters. Evans is an award-winning attorney and industry leader based in Los Angeles and Newport Beach, California. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.  

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Jeremy M. Evans is the CEO, Founder & Managing Attorney of California Sports Lawyer® representing entertainment, media, and sports clients and is licensed to practice law in California.