Is the California lawsuit trying to block the Paramount Skydance merger with Warner Brothers Discovery about to be settled? One might hope so, though some interests might not believe they benefit.
Given the “nuclear option” Paramount could exercise in moving its studios out of Los Angeles to another state, the city and state would benefit from keeping a key firm in a key industry. Paramount itself would prefer not to incur further delay and costs.
Sure, key competitors might prefer continued litigation. But both parties to the lawsuit have big reasons to settle. Paramount wants to execute on its business vision. California wants to keep a key firm in a key industry from moving.
So far, even though much actual production already has left California, studio headquarters and production lots remain based in the Los Angeles area. That matters as video content remains a vital part of the region's economy.
The antitrust argument has been that the merger would give the merged company too much power in the video content value chain. That seems at least questionable.
One high-level example is the oft-cited observation that If a consumer pays $100 at the box office:
$45–50 ultimately remains with the theater
$50–55 goes to the film distributor/studio.
Looking only at the content part of that example, owners of studios with distribution rights represent a bit more than half of revenue shared for exhibition, while theater owners get a bit less than half. But that isn’t the full story of theatrical exhibition revenues and profits.
Movies represent huge risk, as it is not unusual for the top 10 movies distributed in a year to earn as much as 54 percent of all revenue. In other words, a small number of titles generate disproportionate revenue, which is why we see so many “existing franchise” titles issued.
Still, it can be argued that talent (actors) and production workers receive about 20 percent of movie revenues; theaters perhaps the same and other participants also in the 20-percent range, with studios generally getting 35 percent of revenue in the broader video value chain that includes streaming and linear TV elements.
The adage that movie theaters make their profits on popcorn is largely correct. Ticket revenue is shared with the studio, but concessions largely belong to the theater.
Theater chain AMC Entertainment in 2025 generated $2.65 billion of admissions revenue and $1.67 billion of food-and-beverage revenue, for example, according to data filed with the Securities and Exchange Commission by AMC Entertainment.
And studio gross revenue is not profit, as production, talent, marketing costs, financing and overhead consume up to 90 percent of gross revenue, leaving perhaps five percent to 10 percent as expected profit, overall.
In the broader value chain that includes video streaming and linear TV, other elements come into play, such as advertising and subscription revenues.
Warner Brothers Discovery in 2025 reported revenues of about $17.66 billion, composed of :
$6.33 billion advertising revenue
$9.82 billion distribution revenue (paid by streaming and linear networks)
$1.20 billion content revenue.
Content itself was a relatively small part of total revenue. The point might be that revenue shares are highly distributed, even if studios and a class of participants might claim the largest single shares in the value chain.
Even more complicating is the fact that participants often participate in multiple parts of the value chain. Netflix and Disney provide the best examples.
The point is that the video content value chain is quite complex, with lots of participants and lots of distributed revenue streams. It is not so clear that any single role exercises monopoly-style control of the whole value chain. Content matters, but so does distribution, in any of the key segments (theatrical release, linear TV or streaming.
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