What benefits could come from major movie studios merging together in the distant future?

Answer by Jon Ferreira:

During Hollywood’s Golden Age there were eight Hollywood studios commonly regarded as the “majors”. They were Fox Film Corporation (later 20th Century-Fox), Loew’s Incorporated (owner of America’s largest theater circuit and parent company to Metro-Goldwyn-Mayer), Paramount Pictures, RKO Radio Pictures, Warner Bros, Universal Pictures, Columbia Pictures, and United Artists.

In 1948, the studio system was challenged under the anti-trust laws and the case went all the way to the Supreme Court, who ruled that studios were in violation of federal anti-trust laws, and were ordered to divest in the distribution and exhibition of films across the country. The landmark case ended such monopolies, thereby hastening the end of the powerful studio system. By 1954, with television competing for audience and the last of the theater chains severed from studio control, the historic era of the studio system was over. If there was ever a time the studios needed to merge, it was then. If there was ever a worse time to merge is was also then, as studios were skittish after losing the anti-trust suit.

After a couple of fat decades reaping huge profits in home entertainment, the majors now face dwindling revenue, due to a shrinking DVD/Blu-Ray market and the ubiquity of pirated material on the Internet. Furthermore, film is in decline, as society has greater access to diverse platforms and technologies.

Currently, we have six major film studios left, referred to as the ‘Big Six.’ They include Paramount, Warner Brothers, 20th Century Fox, Columbia, Universal, and Disney Studios. Over the last few decades, the studios have harnessed much of their former power and prestige, not through controlling distribution, but through mergers and acquisitions by large multinational mixed-asset media conglomerates, with diverse interests such as cable companies, television stations, publishing, film production, home media platforms, electronics, video games, internet/network services, and various other areas. For example, Paramount Studios is owned by Viacom, Warner Brothers is a subsidiary of Time Warner, 20th Century Fox is a subsidiary of 21st Century Fox and former subsidiary of News Corporation,  Columbia is a subsidiary of Sony, Universal is owned by Comcast’s subsidiary NBC Universal, Walt Disney Pictures remains under the large umbrella of the Walt Disney Company.

The studios show no interest in merging, but it’s more likely their parent companies will. Recently, Comcast spent $336 million over the past year-plus on its failed attempt to acquire Time Warner Cable. That would have collapsed Warner Brothers and Universal into the same company, but I seriously doubt they would merge into one company (Universal-Time Warner?), but rather stay separate entities in the same way Lucasfilm, Marvel Studios, Pixar, and Walt Disney Animation Studios are all subsidiaries of Walt Disney Pictures, itself a holding of the Walt Disney Company.

Having said all that, movie studios, much like the music industry, is losing its grip on the market, and hemorrhaging profit in the digital age. There may come a time when film studios have no other choice but merge. The advantages from such a merger are numerous:

  • A shared library of movie titles, means they could offer better packaged home entertainment under just one label
  • The rights to certain characters and franchises would be more fluid, and characters from one franchise could more easily show up in another related franchise (for example, the recent difficult negotiation over the character of Quicksilver between The Avengers franchise from Marvel Animation [owned by Disney] and the popular X-Men franchise at Fox Studios. Marvel Studios president of production Kevin Feige has admitted: “There are only a handful of characters that occupy that middle ground. Iron Man is not going to show up over there [at Fox] and Magneto is not going to show up over here [at Marvel]. But there are a few gray points even after many years of negotiations … and that only happens with a character like Quicksilver, who has been a part of the X-Men, the son of Magneto in those comics, but also a primary Avenger.” A merger between studios holding opposing rights to the same characters would benefit fans, who long to see their favorite super hero show up in a different context. It’s getting better, but there’s still far to go
  • The sharing of studio equipment, personnel, space, talent, and resources would benefit everyone, forming a veritable super team, with the best in their fields and the best of each studio collaborating together. A Warner Brothers merger with Disney would give WB access to Pixar, and films could see old work in new ways
  • All films would benefit from shared advertising budgets and resources, allowing blockbusters to still get top billing and saturated promotion, but also having money and access to twice as many partners, in order to promote smaller, and more independent features and documentaries
  • Under a larger umbrella, studios could offer more boutique production companies (like HBO, Castle Rock, New Line, etc.) that could have individual mandates and missions, specializing in documentaries, art house cinema, historical films, etc.
  • Each studio would now have access to the other parent company’s stock portfolio and holdings, allowing them to diversify, and possibly get back into movie theater distribution, establish relationships with cable companies to produce new work, access to new facilities and equipment owned by the other company, and ability to release content in new ways and on platforms owned and manufactured be new parent company
  • Have access to greater music libraries for significantly less cost. (for example, a merger with Sony or Columbia would be beneficial to other studios without a music division)
  • Cut costs by eliminating redundancies, lower costs of production with more resources, have a more diverse portfolio of products and investment, control every aspect of pre-production, production, post-production, advertising and promotion, cinema distribution, television tie-ins, international export and distribution, and home entertainment packaging and multi-platform applications

What benefits could come from major movie studios merging together in the distant future?

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