Thousands of Hollywood workers could lose their jobs.
That's the reality facing more than 53,000 employees at Paramount and Warner Bros Discovery as the two entertainment giants finalise a $110 billion (£82.3 billion) merger that will bring HBO, Showtime, and Paramount+ under one corporate roof for the first time.
Paramount CEO David Ellison tried to calm nerves on an investor call last week, claiming 'the majority of our synergy target comes from non-labour sources.' But here's what that actually means: 'majority' is anything over 50%. The company has pledged more than $6 billion (£4.5 billion) in savings within three years. Simple maths suggests up to $3 billion (£2.2 billion) could still come directly from payrolls.
Industry analysts aren't buying the reassurances. The merger carries roughly $84 billion (£62.8 billion) in debt, creating whatNetflixcalled'the largest proposed leveraged buyout in history' at a 7x earnings ratio, according to a press release.
That number matters. When KKR bought RJR Nabisco with a 7.5x leverage ratio in the 1980s, 46,000 workers lost their jobs within six years. When Toys 'R' Us was acquired at 7x leverage in 2005, the company collapsed into bankruptcy. All 33,000 employees were let go.
Warner Bros Discovery employs about 35,000 people. Paramount counts some 18,600 on its books. This is the third merger in eight years.
Paramount itself has already cut staff multiple times sinceSkydance's acquisitionlast year.
Pricing details haven't been announced. But when content libraries double, subscription costs tend to follow. Ellison has promised 'HBO should stay HBO,' though whether that independence survives the cost-cutting remains unclear.
The timing couldn't be worse for creative workers.
Here's what nobody seems to be discussing openly: this merger lands right as Hollywood's unions sit down to negotiate new contracts.
Source: International Business Times UK
