Study: Warner Bros.-Paramount merger could generate $20B in economic activity

By Tom Joyce
The Center Square

A proposed merger between Warner Bros. Discovery and Paramount Skydance could generate nearly $20 billion in annual economic activity and support over 90,000 jobs across the United States, according to a new economic study.

The report examined the companies’ commitment to release 30 movies in theaters each year after the merger, with each studio releasing 15 films annually. It also looked at the impact of keeping those movies in theaters for at least 45 days before making them available on streaming services.

“On the whole, we estimate an annual stimulus of nearly $20 billion through the support of over 90,000 jobs spread across the U.S. Ultimately, the proposed plan would create an environment of predictability for theaters in what has been a volatile business,” the report, authored by Ike Brannon, Ph.D., Erik Bergren and Russell Kashian, Ph.D., and published by the University of Wisconsin-Whitewater, said.

Brannon is president of Capital Policy Analytics and former chief economist for the House Energy and Commerce Committee. Bergren is with Capital Policy Analytics, and Kashian is professor of economics at the University of Wisconsin-Whitewater and director of the Fiscal and Economic Research Center.

Researchers estimated that producing 30 theatrical films each year would generate nearly $12.3 billion in economic activity. That includes about $2.7 billion in direct studio spending and roughly $9.5 billion in indirect and induced economic activity.

The study estimated that film production would directly support about 7,100 jobs, plus 39,300 jobs in the broader economy, for a total of roughly 46,400 jobs. It also estimated that the production would generate about $1.9 billion in federal, state and local tax revenue.

The report also examined the impact of releasing those movies in theaters.

Researchers estimated theatrical releases would generate more than $7.3 billion in additional economic activity each year, including over $2.6 billion in ticket sales and another $4.75 billion in spending at restaurants, food suppliers, hotels, transportation companies and other businesses.

Additionally, the study estimated theatrical releases would support about 25,000 jobs in movie theaters and another 19,800 jobs in related industries. Researchers estimated that activity would generate another $923 million in federal, state and local tax revenue.

The report said the 45-day theatrical window plays a key role in those economic benefits.

“The over 6-week window is crucial for the theater industry’s survival: a short 2- to 3-week schedule entices viewers to wait until movies premiere online, for a much lower price. Anything lower than a 45-day window risks slashing revenues close to 50 percent,” the report said.

Researchers estimated that a longer theatrical window would increase employment in the movie theater industry to more than 140,000 jobs from about 126,000 jobs in 2025.

The report also argued that the benefits would extend beyond movie studios and theaters since more moviegoers would spend money at nearby restaurants and other businesses.

“The catalyst for this economic engine is the commitment of an annual 30-film schedule and a minimum 45-day theatrical window, which are the main drivers behind what could be a close to $20 billion annual stimulus and the support of over 90,000 American jobs,” the report concluded.