Paramount Skydance just beat Netflix in a $111 billion bidding war for Warner Bros. Discovery to buy.
Yes, the company that owns CBS, Nickelodeon, MTV, Comedy Central, Showtime and Pluto TV swallows the company that owns HBO Max, CNN, TNT, TBS, Batman and Harry Potter.
A large-scale corporate merger like this may sound like background noise. But when media giants consolidate, the shockwaves often hit consumers.
I’ve watched telecom and media megadeals unfold for decades, and the promises of “better consumer experiences” almost never materialize. Instead, you usually get fewer choices and a lighter wallet.
This is the impact of the marriage between Paramount and Warner Bros. Discovery on your entertainment budget.
1. Expect your streaming bills to increase
Let’s look at the math. Paramount is taking on an astronomical amount of debt to make this happen. It will pay $31 per share, assume tens of billions of Warner’s existing debt and borrow heavily just to make the purchase. According to The GuardianParamount has lined up $54 billion in new debt to complete the acquisition.
All those debts must be repaid. How does it do that? One way may be to squeeze more revenue from subscribers.
Right now, both Paramount+ and HBO Max are competing for your dollars. Once they are under the same roof, that competition disappears. You’ll likely see aggressive price increases on whatever consolidated streaming platform they eventually launch.
We’ve already seen streaming prices rise across the board in recent years, and a merger of this magnitude only accelerates that trend.
2. Say goodbye to cheap independent services
Right now you can buy Paramount+ or HBO Max separately, or you might even be offered one for free through your cell phone carrier or a Walmart+ membership. Enjoy these benefits while they last.
When media companies merge, they like to bundle. It makes their subscriber numbers look great to Wall Street. You’ll likely see Paramount+ and HBO Max merged into a single, massive streaming app.
While it sounds convenient to have all your favorite shows in one place, it means you’re forced to pay a premium price for a giant bundle of content, even if all you want to do is watch “Succession” or NFL football.
They want to trap you in their ecosystem so you can’t cancel and rotate streaming bundles as easily as you can now.
3. Less original content, more repetition
These are the hidden costs of business consolidation. When two giant studios merge, they look for synergies. In plain English, this means cutting jobs and cutting production budgets.
Before this deal, Paramount and Warner Bros. fought. against each other – and against Netflix – to get your attention by greenlighting new high-quality films and series. With one less major competitor on the market, the newly formed giant doesn’t have to try as hard.
You’ll likely see fewer risky, original shows being produced. Instead, the new company will rely heavily on milking existing franchises, endless spin-offs and reality TV, because they are cheaper to make and carry less financial risk. You pay more per month, but get fewer new, original stories for your money.
So, what should you do now? Keep a close eye on your credit card statements. Check your streaming subscriptions this weekend. If you pay for services that you don’t use every week, cancel them before the post-merger price increases take effect.
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