While Hollywood is bracing for a bloodbath when Paramount closes its acquisition of Warner Bros. Discovery, the company’s biggest backer said those fears are overblown.
“The notion that $6 billion of cost-related synergies means the firing of all these people is just completely antiquated,” Gerry Cardinale, founder of RedBird Capital Partners and a major shareholder in the combined company, said during the Bloomberg Screentime conference on Thursday.
Cardinale, who first backed David Ellison at Skydance and helped push through the acquisition of Paramount, said a majority of the projected merger cost savings would come through non-labor means. He cited the unification of the tech stack that the different platforms live on, as well as selling real estate, as other ways to cut costs.
His appearance at the event comes a day after a judge signed off on a settlement between Paramount and a dozen state attorneys general that essentially sealed what had been a contentious deal, which is projected to close on Oct. 6. Cardinale said he believed the combined companies represent a growth investment, and to give it a couple of quarters before things normalize and you start to see its potential trajectory.
While he said there would be some job losses, he stressed that wouldn’t be the main focus.
“You don’t spend $40 billion a year making movies and think that your entire premise of your business plan is to fire everybody in Hollywood,” he said. “It’s just the opposite.”
But his sentiment stands in contrast with a Los Angeles County-commissioned study that said the merger would result in the loss of nearly 4,500 film and TV jobs and cost the region $2.8 billion in economy value.
As part of the settlement, Paramount is required to produce 30 films for the first two years, and 32 films for the following three years, as well as invest at least $1.5 billion in U.S. productions over that five-year stretch.
Coziness with Trump
Much of the criticism over the merger was related to the Ellison family’s relationship with President Donald Trump, with father Larry Ellison making no secret of his support of the MAGA movement.
Cardinale downplayed David Ellison’s relationship with Trump, calling it “way overstated.” He argued that with such a pro-business administration, every CEO in corporate America should have a relationship with the president.
Indeed, the CEOs of all of the top tech companies have largely paid tribute to Trump through gifts and donations.
“Having that relationship does not mean in any way that there’s this coziness that everyone wants it to be,” he said. “The inference on cozy here is just not appropriate.”
Cardinale touched on several other topics. They include:
- He sees an opportunity for the combined streaming businesses to grow, noting that there is little overlap between HBO Max and Paramount+’s subscriber base.
- He believes valuations in American sports team are way too high. While he didn’t comment on the recent deal led by Bob Iger to buy the Los Angeles Lakers for $12.5 billion, he said he wouldn’t have done the deal.
- Cardinale worked with Ben Affleck to develop AI startup InterPositive, which was sold to Netflix. His firm has a unit called RedBird X that is incubating seven new AI businesses.
- He lauded David Ellison’s ability to draw talent to him. “People are incredibly loyal to him,” he said. “You can’t fake that. And let me tell you, there’s no last name in the world that delivers that. You either are it or you’re not, and people want to work for him because he’s genuine.”
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