Business World: Hollywood, Ignore Hollywood —— By Holman W. Jenkins, Jr.

The streaming bubble burst and hasn't stopped bursting. Netflix's share price has been in steady decline since it entered and exited the battle for the Warner Bros. studio properties.

Covid happened, the Hollywood strikes happened, executives silently thankful for the excuse to cut back the production of unwatched shows. The world is packed with creative people, meanwhile, and new tools make it easy for them to compete.

Hollywood is having a hard time right now, but its biggest handicap may be a certain class of celebrity influencer that has been suffered for too long to live in la-la land. These are the ones telling themselves for the past two weeks that a legally meritorious lawsuit by 12 states to block Paramount's acquisition of the Warner assets was turned back only because nefarious CEO David Ellison threatened to move his company to Tennessee.

Wrong. The states' legal case was the real problem. Worse, California Attorney General Rob Bonta foolishly communicated to the Hollywood faithful that even bogus legal arguments would give him leverage to dictate terms to the merging parties.

Jane Fonda bought Mr. Bonta's guff. Now she's "sickened" at how he "sold people in the entertainment industry, as well as consumers of our creative work, down the river."

"Hate to say it but we all got played," complained fellow actor and guff buyer Mark Ruffalo.

Writer-producer Mike Schur, known for "The Office" and "Parks and Recreation," holds forth on X and in podcast interviews as if antitrust isn't law; it's a magic wand that politicians can use to force companies to hire people they don't need and invest in movies the public isn't interested in seeing.

Happily, somebody did know better -- every Democrat in the state except Mr. Bonta. Most amusing was Gov. Gavin Newsom's attempt in the immediate aftermath to make Mr. Bonta's climb-down settlement, largely under pressure from Mr. Newsom himself, sound like heroism. Nice try, but Mr. Bonta's career may be unsalvageable.

The Ellisons have been spared a prolonged legal ordeal to make even harder the job of keeping up two sprawling studio facilities located in the high-cost Los Angeles area. Their real asset for the future is the combined global reach of the HBO, Paramount+ and Pluto TV streaming services. In the meantime, the company's leaders will be harvesting every dollop of cash from the dying cable TV industry (itself propped up by the NFL) to fund their giant debt.

Hollywood moans about job losses. Those losses were coming anyway. A celebrity contingent has no patience with using business methods to solve business problems; their only idea for improving their industry's competitiveness is tax breaks at the expense of other U.S. taxpayers.

Listen to Mr. Schur, the writer-producer: The function of corporate management and shareholders is to suffer in the name of art. No, in our system, their function is to bear ultimate accountability when Mr. Schur's brainstorms fail to attract an audience after millions of dollars have been invested in them.

Hollywood megadeals have a poor enough record. Warner Bros. is a top operator and yet has been passed around like a dented can of mushroom soup. Its two biggest acquirers in recent decades were AOL and AT&T, both all-time duds.

The Paramount acquisition might yet prove an improbable triumph for shareholders. The new owners just need to find the magic button to spit out hit shows while getting a handle on costs and applying new technologies that so far only provoke revulsion from Hollywood union members.

Apparently free of the mental miasma that prevails in the Los Angeles basin, Jeffrey Katzenberg, the former Disney animation chief who spends more time nowadays in Silicon Valley, chose the moment of peak mourning to suggest on X that his former entertainment colleagues grow up and make peace with artificial intelligence. Good advice.

Clearly the public can consume both slop and quality entertainment in ever vaster amounts while imposing cost pressures on those who make it. Witness Hollywood's scramble to sign up "creators" from YouTube and TikTok. Witness its reliance on game-based movie franchises for which somebody else -- videogame designers -- had to do the decades-long work of building audiences. Witness Netflix's adaptation to a business model of producing video Muzak for people primarily engaged with their phones.

The next thing to watch for: whether Larry and David Ellison, in their desire to be in better odor with the people they offended on their way to completing their merger, falter on the path ahead. Almost every precedent says they will. A much better outcome for Hollywood, though, would be their actual success in creating value for their shareholders and the media-consuming public.

(END) Dow Jones Newswires

October 06, 2026 20:56 ET (00:56 GMT)