U.S. Box Office Rebounds, but Industry Tense over Paramount-Warner Merger

Paramount Logo from 1915

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The U.S. box office is seeing its best performance since 2019. However, as the Paramount-Warner Bros. merger is expected to be finalized within the year, a sense of tension is palpable throughout the industry.

On April 12 (local time), U.S. entertainment media outlet Deadline focused on these two trends. According to marketing research firm Comscore, from January 1 to April 11 of this year, the U.S. box office grossed $2.26 billion (approximately 3.3265 trillion won). This marks a 23% increase from the same period last year. The number of moviegoers also rose by 16% to 154 million.

As recently as April last year, the U.S. box office was still lagging 11% behind the previous year, and concerns about the survival of the theater industry were widespread. However, the success of the "Minecraft Movie," which grossed nearly $1 billion worldwide, has helped the industry rebound.

Despite this boom, the theater industry’s eyes are fixed on what will happen after the Paramount-Warner Bros. merger. David Ellison, CEO of Skydance Media and the new owner of Paramount, has pledged to produce 30 movies a year and to maintain both studios as independent entities after the merger. However, the industry remains skeptical.

Michael O'Leary, CEO of Cinema United, commented, "I believe Ellison is sincere, but we need more than just verbal assurances," adding, "Three years ago at CinemaCon, David Zaslav, CEO of Warner Bros., also promised to make 20 films annually, but he never kept that promise."

The scenario the industry fears most is a repeat of the 2019 Disney-Fox merger. From the beginning of merger talks in 2016 to last year, the combined box office revenue of the two studios decreased by $1 billion (about 1.4715 trillion won), a drop of nearly 70%.

Adam Aron, CEO of AMC, is reportedly not overly concerned about the merger, and Sean Gamble, CEO of Cinemark, also expressed a positive outlook, saying, "Paramount and Warner Bros. have been excellent partners in the theater industry for decades."

Warner Bros. homepage screen

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However, there are differing views on whether producing 30 movies a year is feasible. According to a report published by Hollywood entertainment market research firm NRG, the two studios have actually produced between 14 and 20 films per year since the COVID-19 pandemic.

NRG presented three main scenarios. If the studios produce 25 movies a year, it could fill the content gap and drive audience growth. Maintaining 20 films would only be enough to sustain current results. On the other hand, reducing output to 15 films would significantly increase dependence on major blockbusters and could lead to a high-risk phase with a sharp reduction in box office revenue.

Some believe that producing 30 films a year is not impossible, based on past examples. In the late 1990s to early 2000s, Disney, Touchstone, and Miramax, along with Warner Bros. and New Line, maintained separate production and distribution systems and managed to release around 30 movies annually. A source familiar with the merger told Deadline, "If Paramount+ and HBO Max hope to catch up with Netflix, they will need to invest more, and producing 30 movies a year could be the means to do so."

Financial risk is also a factor. After the merger, the combined debt of the two studios is estimated to reach $79 billion (approximately 116.209 trillion won). The industry believes that relying solely on streaming will not solve this burden. Generating revenue through theatrical releases is considered unavoidable. The combined number of subscribers for Paramount+ and HBO Max is 172 million, trailing behind Netflix (325 million), Amazon (200 million), and Disney+ (195 million).

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