Over the past month, two thunderbolts have crashed down on Hollywood and shaken the foundations of the movie business. Four weeks ago, AT&T made a surprise announcement that it would spin off its WarnerMedia division and merge it together with Discovery Networks to create Warner Bros. Discovery. The very next week, Amazon concluded its long-rumored pursuit of MGM, spending $8.45B to acquire the studio to bolster the content offerings for the e-commerce powerhouse. Additional mergers may well follow, as the major players in global entertainment jockey to reach consumers across all channels, geographies and formats.
Deadline’s Peter Bart recounts how Hollywood’s mega-mergers over the years often have not produced the synergies that were envisioned at the outset. Big egos and new business models were consistently humbled by the entrenched studio system. Will Amazon be more successful in applying its “principles” than General Electric and Coca-Cola in their own Hollywood ambitions when they were at the pinnacle of American commerce? Perhaps they will this time, since both Amazon’s Jeff Bezos and Warner Bros. Discovery’s David Zaslav appear single-minded in their focus on establishing their company’s streaming service as a top-tier choice for consumer entertainment. But they would still do well to learn lessons from the many examples of failed Hollywood mergers.