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The general mood on both sides of the Warner Bros. Discovery and Paramount Skydance aisles on Monday was shock and surprise over the sudden turn of events. And now that Paramount-WB merger has the all-clear signal,
staffers are gearing up for what are expected to be multiple rounds of layoffs in the next few months.
On Sunday, it appeared that the pushback against the state attorneys general to quickly settle was gaining strength. By the evening, with the Yom Kippur holiday looming, there was a sense that no deal was imminent.
So Monday’s announcement of the settlement between Paramount and the 12 state AGs was met with some disbelief — and a feeling by insiders at both companies that the states ultimately didn’t succeed in demanding much from Paramount Skydance, despite all their posturing. And, according to staffers on both sides, whether the reality of a merged Paramount-Warner Bros. has produced relief or anxiety “depends on where you sit.”
“Everybody just wants to know what’s coming,” said an exec.
SoCal-based staffers breathed a little easier after Paramount chief David Ellison’s affirmed that the company will remain in California, after weeks of uncertainty and saber-rattling — sources familiar with the situation had asserted the CEO was serious about pulling up stakes if the WBD deal didn’t close by the end of September. “We aren’t going anywhere. Our history is here and this is where our future is being built,” Ellison said in a statement.
But one source told Variety that people were “pissed and disappointed” with the AGs and not confident in the concessions that they received, and don’t see much value in them or an ability to manage those deal points.
“Why did they give in?” one insider said. “I think people are still very confused about that.”
Even execs inside Paramount were stunned — perhaps pleasantly, but they too weren’t quite sure why the AGs spent so little time focusing on television, despite it being the lion’s share of the business.
“Where was TV?” asked one exec. After all, there wasn’t a single mention in the 12-state antitrust lawsuit seeking to block the merger of what it means to now bring together Warner Bros. TV (which currently produces around 80 series) and CBS Studios (around 60 series). And that doesn’t even include other production entities, like HBO’s massive in-house unit and Paramount TV Studios.
The small nod to cable TV also surprised observers, especially since California Attorney General Rob Bonta had made such noise about needing to see some actionable example of a concession. Instead, the agreement didn’t even pay lip service by forcing the merged entity to get rid of any of its little-watched zombie channels. Instead, those channels (which don’t provide much value anyway, and could easily just be shut down) would only be on the chopping block as punishment down the line.
With no divestitures, a promise of additional production that had already been made and a tough-to-enforce news independence board, critics of the plan didn’t see much meat to the agreement.
Now, the clock resets to just about two weeks before the deal closes — and people who had been concerned by how quickly Paramount had been racing to close the merger are once again distressed at the speed. Of course, a lot of work had been done in the background over recent months, including meetings between groups to figure out workstream, so the new structure of the company should be forthcoming.
For some execs and staffers, clarity at least takes away some distractions from the day-to-day work of fall TV launches and film releases. And there was a sense that some of the most prominent execs in the combined company, including HBO boss Casey Bloys, have been given an assurance that their standing is secure.
But the most immediate question now comes down to layoffs: How many jobs will be axed and how soon. Ellison wrote in a companywide memo Monday that he expects the Warner Bros. merger to close within two weeks. That doesn’t give the combined company much time to pull off its first round of layoffs before the holidays.
“There will be a race to get this done in the fourth quarter,” said one exec, noting that the job cuts would likely be just the first round, as it would be impossible to accomplish the level of expected layoffs all in one swoop. Said another: “I don’t see a world where they’re not laying off a bunch of people before the end of the year. I think there are many people in the industry who don’t even understand the toll it’s going to take.”
RELATED: What’s in the Paramount Settlement With States: Commitment to Not Sell Studio Lots, Additional $300M Yearly Investment in U.S. Film Production, CNN Oversight and More
The threat of layoffs and downsizing was only marginally addressed in the consent decree. Under the terms, the new company must honor collective bargaining agreements and commit $47.5 million to a “workforce fund” over five years for training and career development for employees who are laid off. Separately, Paramount reached a settlement with the Writers Guild of America (WGA) with an agreement prohibiting layoffs at CBS News for five years.
Despite Bonta’s long-running demand for meaningful structural changes, ultimately no requirements for divestitures were included.
Bonta, at his press conference Monday in downtown L.A. announcing the Paramount consent decree, the attorney general suggested that the settlement was “not a vote of support for this merger.” And yet he has now allowed it to proceed.
“It will be interesting to see the reaction to Bonta,” said one exec. “I don’t think he helped his career any.”
