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Big Buzz About Paramount

30 Jun, 2009 By: Thomas K. Arnold

Big industry buzz today about a Financial Times story that says Paramount Pictures is looking to merge its home entertainment division with that of another studio and is in fact in "advanced talks" with Sony Pictures and 20th Century Fox.  The Financial Times story quoted "several people familiar with the situation" but had no on-the-record comments from anyone at any of the three studios.

According to the story, "The talks have focused on combining DVD production, distribution and back-office functions. One proposal would see Paramount begin using Sony’s DADC DVD production system rather than Technicolor’s system, which the studio currently uses. ... Following the merger, Paramount and its partner would outwardly continue to operate as separate entities. The two studios would also keep their own marketing and sales operations."

My take: There's probably an element of truth to the story, although I think calling it a "merger" is a stretch. And I do have it on good authority, from someone who works on the Paramount lot, that a replication change may be coming down the pike. "I see the Sony DADC guys running around there practically every week," this person wrote to me in an email. "Since they replicate with Technicolor, there's no reason for Sony to be there unless some distribution discussions are going on."

Wagging tongues say a third studio may also be in talks with Paramount: Universal Studios.

The merger rumors follow by two weeks a report by Reuters that a leading investment firm thinks Paramount Pictures could itself merger with another studio. "Today there are seven or eight motion-picture studios. A round of consolidation will occur in the next six to 12 months because of the costs of financing, prints and advertising, the benefits of globalization and such,” Reuters quoted CEO Mario Gabelli of investment firm Gamco Investors Inc. telling Barron's. "We hear talk of something going on."

To see Home Media Magazine's coverage of the Reuters story, click here.

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