Consolidation in the theatrical industry is causing concerns among Hollywood’s cinema operators. The recent merger agreement between Paramount and Skydance has raised fears that further consolidation will worsen the production woes that have resulted in fewer film releases in recent years. Michael O’Leary, president and CEO of the National Association of Theatre Owners (NATO), has expressed concern that a merger leading to fewer movies being produced will harm consumers, reduce revenue, and negatively impact people working in all sectors of the industry.
Paramount and Skydance have been production partners for a long time, co-financing and distributing films from various franchises. The merger aims to unify the rights to several of Paramount’s iconic franchises and expand franchise management. However, it remains uncertain how this merger will affect production, as both companies have other producing partners.
Shawn Robbins, founder and owner of Box Office Theory, suggests that the entire industry will closely monitor how the release slate of Skydance and Paramount evolves in the coming years. While there is cautious optimism, the situation is different from if another major studio had acquired Paramount, which would likely have reduced the output of theatrical content significantly.
The trepidation surrounding this merger is not unfounded, as it comes after the consolidation of Disney and 20th Century Fox in 2019. Before the merger, each studio released around a dozen titles per year. Since then, the combined studio has only released about a dozen films annually. In 2024, the two studios have only debuted three titles so far. Theater owners worry that a diminishing number of films in the marketplace will negatively impact their bottom line.
Paul Dergarabedian, senior media analyst at Comscore, explains that theater owners’ concerns stem from a diminishing number of films affecting their revenue. However, he highlights that the quality of releases and their appeal to audiences matter more than sheer quantity. If there are fewer films but with higher average revenue per film, it can create a leaner and more sustainable business in the long run.
Despite the challenges faced by the theatrical industry, there is an immediate bright spot with the merger between Paramount and Skydance. The merger will bring together Skydance Animation and Nickelodeon, making Paramount a leader in animation. Animated features have seen strong box office sales, with films like Disney and Pixar’s “Inside Out 2” and Universal and Illumination’s “Despicable Me 4” performing exceptionally well.
NATO’s O’Leary emphasizes the importance of a Paramount that recognizes the unique place of theaters in communities and expresses hope for more movies being available on the big screen. The industry eagerly awaits more information about the proposed merger and looks forward to working with all interested parties to achieve the goal of increasing movie options for audiences.
In conclusion, while consolidation in the theatrical industry raises concerns about production woes and a diminishing number of films, there is also cautious optimism and recognition that quality releases are essential. The merger between Paramount and Skydance presents an opportunity for Paramount to become a leader in animation, which has been a successful genre at the box office. The industry hopes for a Paramount that supports theaters and provides more movie options for audiences in the future.
