By Harshita Mary Varghese and Lisa Richwine
Sept 22 (Reuters) - Paramount Skydance is promising the largest volume of movies in Hollywood after its Warner Bros. Discovery purchase as it also aims for up to $6 billion in cost savings. Wall Street is asking how that will add up.
Under Monday's settlement with California and other states, the combined company must distribute at least 30 films a year to theaters in each of the first two years and 32 annually in each of the following three years. That's
up from the 28 movies the two companies are on track to release this year.
The last time a single company released 30 movies nationwide was in 2007, according to Rentrak, when films were more profitable and less expensive. Today, Hollywood studios typically distribute about half that number in a year, and the possibility of a diminished release slate has concerned theater owners who depend on more releases.
Paramount will have discretion over how it allocates production spending across the 156 films required over the five-year period, provided it meets the settlement's thresholds. That could make the economics of the slate as important as the headline number.
"Protecting the number of films does not protect the money spent making them," said Paolo Pescatore, an analyst at PP Foresight.
The industry has been contending with shrinking audiences as streaming and social media gain ground. Productions in Los Angeles, the center of filmmaking, have declined, hurting jobs and the local economy. The industry's rebound this summer was powered by higher ticket prices and premium-format screenings rather than a broad return of moviegoers.
Terms of the settlement require that at least 20%, or at least six, of the yearly slate from the combined company must be blockbusters with production budgets of at least $50 million each. That threshold is well below the cost of many recent studio tentpoles that can run to more than $200 million to produce, such as "Spider-Man: Brand New Day" and "The Odyssey."
The combined company must also spend an additional $1.5 billion on US film and television production over five years, or $300 million a year above its 2025 baseline.
Paramount would pay a penalty of $30 million per missed film, much of which would go to Hollywood labor unions for retirement and healthcare benefits, California Attorney General Rob Bonta said. The settlement also includes measures to prevent Paramount from filling its slate with low-budget or AI-generated productions to satisfy the commitments, he said.
The company did not comment for this story.
It also requires spending on marketing "consistent with typical practice for similar films and release patterns." Marketing costs for big-budget releases can range from $100 million to $200 million per film.
The agreement does not require the same level of investment for every film, leaving Paramount room to structure its slate around a mix of big-budget releases and smaller productions.
"Whether by AI or other means, Warnermount will have wiggle room to produce films quickly if they need to," said Emarketer analyst Ross Benes, using a portmanteau for the combined company. "The settlement terms do not alter the structural issues that spawned antitrust concerns to begin with."
Lower budgets do not necessarily mean lower quality. A number of recent, relatively inexpensive horror and thriller films became commercial hits and gave emerging filmmakers a path to larger projects.
"Maybe that is a page the big studios can take out of their playbook, and even work with some of these up-and-coming directors on lower budgets to get more movies out," said Ken Mahoney, CEO of Mahoney Asset Management.
Theater operators had pressed for enforceable commitments to keep movies flowing into cinemas, arguing that any reduction in the number of movies sent to theaters threatens their survival.
They had expressed skepticism about Paramount's promises, noting that Disney and 21st Century Fox released a combined 26 films in more than 2,000 US and Canadian theaters before they merged in 2019. In 2025, they had just 14 wide releases.
"Hollywood is right to demand promises that hold when the pressure to cut costs intensifies," Pescatore said.
Bob Bagby, CEO of family-owned B&B Theatres, the fifth-largest US cinema operator, said he was "very pleased" with Paramount's settlement with the states.
"We are hopeful this transaction will support a strong pipeline of compelling content for our guests," Bagby said.
(Reporting by Harshita Mary Varghese in Bengaluru and Lisa Richwine in Los Angeles; editing by Ed Lee and David Gaffen)
