Paramount Skydance and Warner Bros. Discovery struck a tentative acquisition deal that could reshape Hollywood’s corporate hierarchy and global entertainment real estate.
Paramount's $111 billion, all-cash bid for the entirety of WBD would bring together two major content libraries and production operations, raising questions about some 12 million square feet of overlapping studio campuses, office space and long-term lease commitments in markets such as Burbank, Hollywood and New York.
Warner Bros. operates a 3 million-square-foot lot in Burbank with more than 30 soundstages — along with space for building sets and backlot areas — where classic movies like "Casablanca" and television shows like "Friends" were filmed. Paramount, meanwhile, owns its historic 1.2 million-square-foot Melrose Avenue campus where classic films like "The Godfather" and "Titanic" were shot; the property anchors a broader network of owned and leased production space.
Competing bidder Netflix has dropped out of the bidding war for Warner Bros., but still, the Paramount agreement is not yet a done deal and must clear regulatory review and shareholder approval.
While federal trade officials have voiced support for the merger, California Attorney General Rob Bonta has said any purchase of Warner Bros. by another media firm would raise antitrust concerns, namely that reduced competition would hurt workers in the media industry.
“Consolidation of markets has led to increased unaffordability, a loss of good-paying job opportunities, and fewer choices for consumers,” Bonta said in a statement, adding that "California is taking a very close look" at the proposed deal.
The transaction, even if not finalized, still serves up the latest shakeup to the Los Angeles studio market. The region is navigating elevated vacancy and a slowdown in streaming production that's created empty soundstage space across the county.
Real estate implications
Warner Bros. occupies 11 million square feet and owns 14 properties totaling 9.5 million square feet, largely in the United States and United Kingdom. About 3 million square feet of that commercial real estate is in the Los Angeles area, according to CoStar data.
The firm's portfolio also includes the 1.3 million-square-foot Warner Bros. Leavesden complex in the U.K. and a 350,000-square-foot Turner Broadcasting Systems headquarters at 1050 Techwood Drive NW in Atlanta.
Paramount Skydance, meanwhile, occupies 8 million square feet and owns 14 properties totaling 2.1 million square feet, according to CoStar data.
In addition to its iconic Hollywood campus, Paramount's holdings include several prominent New York City buildings such as the 80,000-square-foot Ed Sullivan Theatre in midtown Manhattan and the CBS Broadcast Center building at 524 W. 57th St.
Industry brokers say overlapping back-office operations, marketing teams and streaming divisions could create near-term sublease opportunities, particularly in Class-A office properties that catered to media tenants during the streaming expansion cycle.
For landlords in Burbank, New York City and West Los Angeles, a central question is whether the combined company consolidates operations onto one primary campus or maintains parallel hubs. The answer could influence soundstage leasing velocity as well as demand for nearby creative office and postproduction space.
Among the landlords exposed to the deal are Hudson Pacific Corp., Hackman Capital Partners, Kilroy Realty, Pimco Prime Real Estate, Goodman Group and Worthe Real Estate, according to CoStar data.
The real estate effects of consolidation often lag deal announcements, said Nicole Mihalka, a senior vice president at CBRE who represents several high-profile soundstages across Los Angeles.
“There’s a lot of real estate in both Hollywood and Burbank that could be affected, but we don’t know yet what it’s going to look like,” she told CoStar News. What is clear, she added, is a growing push among landlords and users to reduce costs by consolidating production into fewer, more efficient locations.
“There’s an interest in consolidating — sort of vertically integrating the whole production,” a trend that could reshape occupancy patterns even if overall production stabilizes, she said.
Consolidation ahead
Consolidation is already reshaping how studio real estate is used, according to Carl Muhlstein, a longtime Los Angeles entertainment real estate broker and principal at Burbank-based Muhlstein CRE.
Paramount's acquisition of Skydance last year resulted in a reported 2,000 layoffs. The Disney–Fox merger in 2021 offers another precedent: After cutting thousands of overlapping jobs and consolidating operations in Burbank, Disney ultimately vacated the Century City Fox lot, leaving landlords to backfill large blocks of specialized studio space years after the deal closed.
In addition to industry consolidation, the Los Angeles entertainment industry has been struggling to recover from the pandemic, the writers' and actors' strikes in 2023 and a changing media landscape. Nonprofit industry tracker FilmLA reports soundstage occupancy in the low-60% range. That is well below the roughly 90% levels seen during the 2020 streaming boom.
"It's no secret that truck drivers, makeup artists, lighting grid people, caterers have less employment,” Muhlstein said, noting that industry studies show that every studio job supports roughly eight others.
While the Warner Bros. sale impact on real estate may not be immediate, Muhlstein warned that landlords face “big question marks, not necessarily right now, but five years from now,” particularly if new soundstage developments open into a softer production environment.