Movies

Hollywood is struggling. So why does anyone want to buy a movie studio now?

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1. The movie theater box office industry is experiencing a slump. It’s more challenging than ever to persuade audiences to leave their homes and go to the cinema. The movie business model that relies on streaming is still being developed.

2. Cinema ticket sales are dwindling. It’s tougher than ever before to convince people to step away from their homes and watch a movie in the theater. The approach for movies through streaming platforms is still being fine-tuned.

3. Sales at the movie theater are decreasing. It’s becoming increasingly difficult to persuade viewers to abandon their homes and watch a film at the cinema. The strategy for movies distributed via streaming services is still under construction.

4. The market for cinema ticket sales is struggling. It’s harder than ever before to get people out of their houses and into the theater. The movie industry model that relies on streaming platforms is still being perfected.

5. The revenue from movie theaters is declining. It’s tougher than ever to encourage people to leave their homes and go to the cinema. The business strategy for movies distributed via streaming services is still being refined.

Given all these challenges, who would want to buy a movie studio now?

It’s been revealed that there has been buzz in the entertainment industry lately about the possibility of film and TV production company Legendary Entertainment, known for movies like “Dune” and “A Minecraft Movie,” acquiring Lionsgate Studios, the company behind “The Hunger Games” and “John Wick.” Neither company has confirmed these reports.

It’s hardly the only deal news in the film business.

In June, Alcon Media Group, a film finance and production company renowned for movies like “The Blind Side” and “Blade Runner 2049”, acquired the film library of Village Roadshow Entertainment – best known as the producer and financier behind “Joker” and “Ocean’s Eleven” – for $417.5 million following an auction during Village Roadshow’s Chapter 11 bankruptcy proceedings. Neither Village Roadshow nor Alcon responded to requests for comment about this acquisition.

Hollywood Inc.

Skydance made a commitment to individually hire an ombudsman from CBS News, aiming to enhance openness and responsibility within the organization. Furthermore, Skydance’s CEO, David Ellison, has held talks with conservative journalist Bari Weiss.

In other news, the highly anticipated acquisition of Paramount Global by Skydance Media, a whopping $8-billion transaction, was given the green light by the government on Thursday.

Despite the financial markets experiencing turbulence during the first half of the year due to uncertainties like President Trump’s tariffs and trade policies, lawyer Tom Ara from Weil, Gotshal & Manges’ private equity group suggests that there might be a build-up of demand for business transactions which could surface in the following months and years, given his role as head of their entertainment, sports, and media practice.

A significant amount of investment capital is waiting to be used, and I believe many strategic and financial entities are eager to strike deals. In terms of entertainment, films and TV remain the most affordable option for most people, making them a continuing force in this industry.

The impact of the COVID-19 pandemic on movie attendance has been significant and long-lasting, with no signs of a full recovery yet. As reported by Comscore, domestic revenue is currently 24% lower than it was in 2019. Despite the challenges faced by the industry during this time of change and instability, savvy investors, both domestic and foreign, recognize the potential value in the content being produced by film studios.

Hollywood Inc.

Disney’s real-life version of ‘Lilo & Stitch’ is now the initial American movie in 2023 to generate over $1 billion in global ticket sales at the box office.

The significance of intellectual property has grown substantially, as people tend to prefer content that is familiar to them. With studios possessing extensive archives of movies, these collections could be ripe for revisions like remakes, follow-ups, prequels, or spin-offs. Moreover, they provide owners with various avenues for generating income beyond films, such as merchandise, theme park collaborations, television series, streaming agreements, and licensing deals.

Brandon Katz, from Greenlight Analytics, explained that it’s not primarily focused on immediate profits, but rather seeing this film studio as a stepping stone for long-term strategic gains. He suggested these studios aren’t just individual cash generators; instead, their value lies in the wider network or ecosystem they are part of.

Movies are an exceptional method for creating value due to their global reach; a successful film can generate income throughout all stages of its distribution following release. This observation was made by J. Christopher Hamilton, a legal practitioner and media business expert at Syracuse University.

Hollywood Inc.

With productions such as ‘Godzilla vs. Kong,’ Legendary Entertainment, now under China’s Wanda Group ownership, is making a strong return to the entertainment industry. Will their forthcoming project ‘Dune’ prove profitable?

He analogized it as if one were handed the essential components to construct an empire. Regardless of the streaming network’s success, it can’t generate the same worldwide influence in all aspects as a blockbuster movie does.

Investment firms specializing in private equity, drawn to film and television libraries due to their consistent income streams, have slightly reduced their focus on Hollywood compared to before. However, certain organizations have still been involved in recent transactions. For instance, RedBird Capital Partners is supporting Skydance’s bid for Paramount, and Apollo Global Management has also shown interest in Paramount through a joint bid with Sony Pictures Entertainment. It’s worth noting that Apollo holds a minority share in Legendary as well.

For quite some time now, Lionsgate has been viewed as a possible takeover candidate, given its status as one of the few remaining “mini-major” film studios within the entertainment industry.

In 2016, the company purchased Starz cable network for approximately $4.4 billion as part of an effort to strengthen its position and compete more effectively within the media landscape. However, the conventional television business model faced a significant decline with the surge of streaming services. Recently, they decided to separate from Starz and become two distinct publicly-traded companies. More recently, Lionsgate combined its production studio with a special acquisition company in a transaction that appraised its assets at $4.6 billion, providing it with the means to obtain additional funding.

Lionsgate’s break from Starz was viewed as a means for them to distance themselves from the waning success of the television industry and become more appealing to potential buyers as an independent studio, according to analysts. Additionally, Lionsgate has a distribution division, which could be alluring to a company like Legendary, known for partnering with studios such as Warner Bros. to distribute their films.

Fury Road,” has been put up for sale due to a tough legal dispute with Warner Bros., as well as the impact of the pandemic and the simultaneous writers’ and actors’ strikes in 2023, which hindered their ambitious project lineup.

Alcon, under the leadership of co-CEOs Broderick Johnson and Andrew Kosove, may find it challenging to fully utilize some of their properties as many were jointly produced and financed with Warner Bros. Pictures. However, Alcon recognizes the worth of these assets to expand their own content collection. According to Alcon’s statement, the Village Roadshow titles collectively generate approximately $50 million in annual revenue.

To put it simply, for David Ellison and his wealthy father, Larry Ellison – the co-founder of Oracle Corp – purchasing a well-established studio like Paramount represents a chance to revitalize an asset that has been affected by poor management choices and insufficient investment over time.

Who else could be in the market for a studio or film library during this period of consolidation?

Experts and analysts suggest that there could be potential buyers from the Middle East for foreign investments.

As a seasoned movie critic, I’ve been keeping an eye on the dynamic shifts within the global film industry. Qatari broadcaster BeIN Media Group, where I hold a significant stake, already partners with Miramax (a half-owned venture by Paramount Global). Last year, Saudi Arabia unveiled a $100 million film fund, signaling a promising draw for productions in the region. And it’s not just me who sees the potential of untapped audiences and markets in the Middle East; Hollywood giants like Disney have also jumped on the bandwagon. This year alone, Disney announced plans to establish a new theme park in Abu Dhabi, United Arab Emirates, further underscoring the region’s growing significance in the film and entertainment landscape.

Despite popular speculation about tech giants such as Apple or Google buying established film studios, the lack of any successful deals so far – apart from Amazon’s acquisition of MGM Studios – might suggest that these companies view studio ownership as a low priority in their business strategy, according to Hamilton.

Reflecting on the conversations surrounding mergers and acquisitions, it’s clear that the industry is dynamic and unpredictable. As an admirer, I can’t help but appreciate the pragmatic insights from professionals like Corey Martin, managing partner and chair of Granderson Des Rochers’ entertainment finance practice, who shed light on how individual studios are carefully evaluating their own prospects for the future.

He expressed his belief that there will be more unification among these entities. He noted that some of these groups are starting to realize their roles – either as potential acquirers or those being acquired – and if they’re the latter, they should consider how they can optimally boost shareholder value.

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2025-07-25 13:34

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