Something besides industry consolidation is clearly to blame for Hollywood’s current contraction.
The Democratic attorneys general who sued to block Paramount Skydance’s acquisition of Warner Bros. have cast themselves as defenders of Hollywood’s workers. They argue that the merger will result in fewer jobs in the entertainment industry. But at least one prominent Democrat isn’t buying it. California Governor Gavin Newsom, whose own attorney general is leading the suit, has quietly urged him to settle rather than block the deal outright. Why? Because he thinks killing the merger could cost California more jobs than if it goes through. He’s right.
The entertainment unions themselves stand against the merger. The Writers Guild of America has even filed its own antitrust suit, arguing that fewer studios mean fewer employers bidding for writers, and therefore lower pay and worse terms. SAG-AFTRA, representing 160,000 performers, has resolved to oppose the deal unless the combined company guarantees it won’t cut production. Their fear is understandable. This is an industry already in visible retreat. When the ground is shifting under your feet, the instinct to fight for the old, stable status quo is a human one. But fear, no matter how understandable, can still be aimed at the wrong target.
The real question isn’t whether Hollywood is shedding jobs. It plainly is. Los Angeles County film and television employment fell from roughly 142,000 jobs in 2022 to about 100,000 by late 2024, a nearly 30 percent collapse. But that happened with Paramount and Warner Bros. operating as separate companies. Something besides industry consolidation is clearly to blame for Hollywood’s current contraction.
The truth is that much of this pullback is a classic reaction to a changed market. First, there was a streaming boom in the early 2020s, often referred to as “peak TV.” Every studio flooded the market with content in an attempt to attract subscribers to their newly launched platforms. They have since scaled back after learning that not only was it just unsustainably expensive to engage in a content arms race, it was also leading to increasingly low-quality outputs that were failing to attract audiences of a sufficient size.
Disney is the clearest case of this boom-bust cycle in action. Under Bob Chapek, it flooded Disney+ with Marvel and Star Wars content, a wave of interconnected series and films that eventually wore out even devoted fans and produced expensive misfires like The Marvels. Bob Iger, who came out of retirement to take the reins back from Chapek, then committed to cutting Marvel’s output from roughly four films and four series a year down to about two of each. Iger put it plainly: “quantity in many ways can destroy quality.”
The relevant question to ask when evaluating the potential merger’s effect on the jobs market is whether it would make the already strained labor market meaningfully worse.
To answer that, let’s start with the writers’ central claim. The Writers Guild argues that combining two of the five major studios shrinks the pool of employers competing for talent. But the principal market today for script writers and film actors alike is not confined to those five studios; it now includes behemoths such as Netflix, Amazon, and Apple, all of which regularly commission original films and series but only entered this business in the last decade. The number of potential employers in their market to whom they can turn is clearly bigger today than it was then. That doesn’t erase the concern vulnerable writers and actors will feel as some studios merge or shrink their output, but it cuts hard against the idea that this deal leaves them facing some drastically narrowed field.
Then there is the deeper problem with the union position that measures the merger against a world that no longer exists. The choice here is not between one merged studio and two thriving independent competitors. It is between one merged company and two wounded ones, each struggling separately against streaming’s gravity and mounting debt.
This perspective changes the math on the jobs picture entirely. Yes, a merger eliminates redundancy. Two companies becoming one means duplicate departments get cut, and some workers will not make the transition. But the alternative isn’t preservation. The status quo is two medium-sized ships taking on terminal amounts of water separately. A merger constructs one larger vessel that can actually stay afloat. The latter option saves more people than two that will inevitably go down if left as they are.
This is essentially Newsom’s point, and it deserves to be taken seriously rather than dismissed as heresy. If the deal is blocked or dragged out indefinitely, the companies don’t simply stay put and keep hiring. They cut deeper, and they look for cheaper ground. Productions are already fleeing Los Angeles for states and countries with richer incentives. The attorneys general suing to protect their states’ entertainment workers are only making it likely that more of those jobs will be lost.
The jobs Hollywood is losing today aren’t being taken by this merger. They’re being lost to a business that is fundamentally reordering itself. Blocking the deal won’t bring them back. It will only ensure fewer of them survive the transition.