What did Paramount promise Hollywood to secure WBD?

A new movie every 11 days? That’s what Paramount’s David Ellison is promising after clearing a path this week for his company’s acquisition of Warner Bros. Discovery, combining two storied Hollywood studios.

The CEO’s settlement with a group of state attorneys general over antitrust concerns stipulates that the newly minted company will release at least 30 films into theaters in 2027 and 2028 and at least 32 films in 2029, 2030 and 2031.

Currently, the combined entity has 35 films scheduled to be released next year, according to data from Rentrak.

But questions remain about what caliber of releases the industry can expect — and what happens after the five-year agreement expires.

“This is much more complicated than simply asking whether 30 movies is enough,” Paul Dergarabedian, head of marketplace trends at Rentrak, told CNBC. “Thirty wide releases would represent a meaningful commitment to theatrical, and I think everyone in exhibition would welcome a robust pipeline of films.

“But ultimately the proof will be in how those movies perform, how varied the slate is, how consistently they reach theaters and how the combined company executes on those commitments,” he said.

Hollywood has been clamoring for more theatrical titles since the Covid pandemic shuttered theaters and clogged the production pipeline. Ellison’s theatrical commitment, which he touted as early as April at the industry’s annual CinemaCon event, had garnered approval from the CEOs of the “Big Three” cinema operators — AMC’s Adam Aron, Cinemark’s Sean Gamble and Regal’s Eduardo Acuna — even before Paramount’s settlement.

Cinema United, the lobbying group that represents theater owners, had been staunchly against the merger, but gave its seal of approval this week, saying the agreement with the states “accomplishes many of exhibition’s objectives.”

However, not all exhibitors are on board. A number of theater executives, who requested anonymity to speak candidly, told CNBC they remain skeptical.

Paramount’s settlement includes stipulations about the number of theatrical releases the company must distribute over the next five years, how many of those releases need to be distributed widely and how many need to have a budget of more than $50 million. Paramount agreed to face steep penalties if it fails to meet the thresholds.

Consolidation among movie studios has traditionally led to fewer film releases, which, in turn, results in lower revenue, particularly for smaller theater chains and independent operators.

Overall industry dynamics have shifted drastically since Covid disrupted the theatrical space, leading to fewer screens and fewer moviegoers. Some of these woes have been masked by higher movie ticket prices…