On June 19th, officials announced that a new report suggests the merger of Paramount Skydance and Warner Bros. Discovery could result in the loss of approximately 2,495 jobs in the greater Los Angeles area, with a global total of about 6,000 positions potentially being reduced.
According to reports from the City News Agency, the Los Angeles County Department of Economic Opportunities (DEO) released a report on the 18th highlighting that at-risk positions are mainly concentrated in corporate management, technology, real estate, and other shared functional areas due to significant job overlaps between the two companies.
The department stressed that this estimation should not be interpreted as a prediction of layoffs but rather is meant to define the scale of employment that may be affected due to the business integration.
Officials from the department indicated that the new merged company will take on approximately $82 billion in total debt, an unusually high level compared to its earnings, amounting to about seven times the current annual profit. This has raised concerns about whether the post-merger company’s profits will be sufficient to support such a massive debt burden.
The report also highlighted that the new company may seek over $6 billion in anticipated cost savings, further intensifying pressure on integrating corporate operations, technology systems, real estate, and administrative management departments.
This report is a response to a motion put forth by Lindsey Horvath, a supervisor in Los Angeles, on March 17th and approved by the board.
The Department of Economic Opportunities collaborated with the Los Angeles County Film Office to commission a preliminary analysis by CVL Economics over a 60-day period. The final 120-day analysis report is expected to be released in August, including more analysis results and policy recommendations to support the long-term resilience and development of the labor force, businesses, and the entertainment industry in Los Angeles.
In a statement, Kelly LoBianco, Director of the Department of Economic Opportunities, mentioned, “These research findings once again confirm the issues that labor, employers, and small businesses have been consistently reflecting to us for years: our entertainment industry is still in a fragile recovery phase.”
About a week before this report was released, the Department of Justice approved the proposed acquisition of Warner Bros. Discovery by Paramount Skydance, paving the way for the merger of two long-standing Hollywood giants and significantly reshaping the entertainment industry landscape.
The Department of Justice mentioned in a statement that the transaction is unlikely to harm market competition or U.S. consumer interests in streaming video on-demand services, traditional linear TV channels, and the development, production, and distribution of theatrical films.
This estimated $110 billion deal will combine the century-old Paramount Pictures and Warner Bros. film studios. The merged company will also oversee platforms like Paramount+ and HBO Max, the CBS television network, and multiple cable TV channels including CNN.
However, some entertainment industry professionals and elected officials oppose this transaction, fearing that it will further consolidate media ownership.
In April of this year, over 1,000 entertainment industry professionals signed an open letter opposing the merger, believing that in a highly concentrated industry, this deal will further weaken market competition.
Under state and federal antitrust laws, California Attorney General Rob Bonta has the power to prevent or delay this merger.
Bonta’s office has publicly stated that they are actively investigating and coordinating with other states, and a decision on whether to file a lawsuit against the merger is expected soon. Even though the Department of Justice has approved the deal, state-level litigation and preliminary injunctions could significantly delay or even prevent the completion of this merger.