Warner/Paramount sets up Hollywood to shrink from Big 5 to Big 4, a decade after Disney took out number 6

Two of Hollywood’s oldest studios may be consolidating into one. In a shocking twist after a monthslong bidding war, Paramount has emerged as the apparent victor in the fight to acquire Warner Bros.

Netflix, who backed away from the deal Thursday, had hoped to win the movie studio and its vast film library. Paramount wants it all: Movies, cable networks and news.

Almost 10 years ago, Hollywood’s big six became the big five when Disney bought most of 20th Century Fox. Now the big five looks like it’s destined to become the big four, including Universal and Sony, and the business of Hollywood moviemaking is once again in a time of profound transition.

Here’s what we know, what we don’t and some burning questions.

Why did Netflix bow out of the fight?

Simply put, it was no longer “financially attractive,” the company said.

In December, Netflix had reached a deal to acquire some of Warner Bros. Discovery’s assets: Their library, movie studio and HBO. Almost immediately Paramount, who months earlier had expressed interest in purchasing Warner Bros., initiated a hostile takeover bid for the whole company, which culminated in a $31 per share offer this week. Netflix, whose previous offer was $27.75 per share, declined to counter.

“We believe we would have been strong stewards of Warner Bros.′ iconic brands,” Netflix’s co-CEOs Ted Sarandos and Greg Peters said in a joint statement. “But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”

Warner had repeatedly backed the deal it struck with Netflix right up until Thursday evening, when its board continued to recommend Netflix even while calling Paramount’s bid, valued at about $111 billion including debt, “superior.”

David Zaslav, the chief executive of Warner Bros. Discovery, said in a statement that they’re excited about, “the potential of a combined Paramount Skydance and Warner Bros. Discovery and can’t wait to get started working together telling the stories that move the world.”

What are Paramount’s plans with Warner Bros.?

Paramount Skydance chairman and CEO David Ellison has said that he would like to grow their combined slate to more than 30 movies a year, keeping Paramount and Warner Bros. as stand-alone operations.

In documents filed to the Securities and Exchange Commission last month, Paramount said, “Our priority is to build a vibrant, healthy business and industry — one that supports Hollywood and creative, benefits consumers, encourages competition, and strengthens the overall job market.”

They’ve also said they would look for ways to save some $6 billion through job cuts in “duplicative operations.”

Executives at Paramount have argued that merging with Warner will allow it to compete with bigger rivals particularly in the streaming space and bring larger content libraries for its customers.

How is Hollywood responding?

Reminiscent of the hours after the Netflix deal was announced in December, there isn’t much public chatter from those inside the industry yet, but with several awards shows in the near future, including the Actor Awards Sunday, the relative silence is poised to break soon.

The Paramount news broke as promotion is happening for Warner Bros’. latest movie, “The Bride!” Filmmaker Maggie Gyllenhaal told The Associated Press Friday that she didn’t feel prepared to speak to the deal specifically, but she did offer praise for the studio that supported her film.

“I was reading tweets about it as I woke up this morning,” Gyllenhaal said. “I don’t have a position but I do feel really deeply supported by (Warner Bros. Motion Pictures Chairs) Pam (Abdy) and Mike (DeLuca) and I feel that they have been taking a slightly different route than most of the other people around them. They’ve been supporting films that are actually about something while at the same time, I think, encouraging the filmmakers who are making them to reach as big of an audience as possible. That combination is very specific and very precious.”

The current state of Paramount movies vs. Warner Bros.

Warner Bros., among the most filmmaker friendly studios operating, has had a banner year with major blockbusters and critical successes. This year they collected 30 Oscar nominations thanks to “Sinners,” “One Battle After Another” and “Weapons.” Paramount films received zero.

In 2025, Warner Bros. movies (including “A Minecraft Movie,” “Superman” and “Sinners”) also accounted for 21% of the domestic box office; Paramount’s market share was only 6%, driven largely by “Mission: Impossible — The Final Reckoning,” which didn’t even place in the top 10 (it was 11th).

In November, Paramount pledged to up its 2026 theatrical output to at least 15 movies. Before the Skydance merger, the studio was more regularly releasing eight movies a year.

Though Paramount’s less than stellar 2025 has been attributed to the previous regime, Skydance has also not had the smoothest run at the box office, and its biggest hits have centered around Tom Cruise, with “Top Gun: Maverick,” its only billion-dollar film, and five “Mission: Impossibles.” It’s attempts to restart the “Terminator” franchise were less successful.

While Warner Bros. has succeeded with a combination of original and franchise films, Paramount’s slate is decidedly more franchise heavy with intellectual property like “Transformers,” “Scream,” “Sonic the Hedgehog,” and “Paw Patrol” in their arsenal.

Is this a better outcome for movie theaters?

Cinema United, the trade organization representing movie theaters, was vehemently opposed to a Netflix-owned Warner Bros. for fear of what it might mean for movie theaters. Exhibition and box office has not fully recovered since the pandemic — previously the annual domestic box office would regularly surpass $11 billion. Since 2020, it’s only exceeded $9 billion once.

But consolidation is also a concern. Although Paramount has an established background in theatrical distribution, Cinema United worried about that outcome as well, which they explained in a statement to the Senate Judiciary subcommittee hearing in early February, noting that a combination of Paramount and Warner Bros. would consolidate as much as 40% of each year’s domestic box office in a single studio.

“We have been clear from the outset about our concerns around consolidation, and nothing that has occurred within the past 36 hours has changed that,” said Cinema United’s president and CEO Michael O’Leary, in a statement Friday. “Studio consolidation historically leads to fewer movies being made, and at this juncture, there is no reason to believe the outcome here will be any different. We continue to urge regulators to heed the lessons of the past.”

In theory, a guaranteed 30 films a year would be a good thing for movie theaters, assuming they all go to theaters and it’s not a combination of theatrical and streaming titles as has happened with a Disney-owned 20th Century Studios. But some are skeptical that will pan out.

Hollywood historian and author Mark Harris wrote on Bluesky that “the idea of a Paramount-WB merger producing 30-40 movies a year is an absurd fiction.” He predicted that first Warner Bros. will become the “classy” label within Paramount, “then it will become the specialty or streaming label. Then it will die.”

Will HBO Max and Paramount+ combine?

This remains unclear. It’s possible there will be a bundling situation as with Disney+ and Hulu.

What will happen to the studio lots?

With Paramount taking on billions in debt and equity for this deal to go through, many are wondering what will happen to the two California studio lots, especially in a moment where productions are rarer and rarer in California.

The storied Paramount lot on Melrose in Los Angeles has 30 stages on 65 acres, hosting productions from “Sunset Boulevard” to “Forrest Gump.” Warner Bros. Studios in Burbank sits on a 110-acre lot with 31 soundstages and 11 exterior sets, where productions have included “My Fair Lady,” “Gilmore Girls” and “Friends.” Both are historic sites in their own right. Warner Bros. also has a massive studio in the U.K., in Leavesden.

Will regulators approve the deal?

That remains to be seen. The U.S. Department of Justice has already initiated reviews, and other countries are expected to do so, too.

This story was originally featured on Fortune.com