Paramount Deal and U.S. Film Incentive Reflect Hollywood’s Deepening Ties to Government

Last week, politicians decided they could not let Hollywood slip away.

First, California Gov. Gavin Newsom pushed for a resolution of the Paramount antitrust case out of fear that the studio would leave the state. And in Congress, Republicans and Democrats joined to introduce a U.S. film incentive, recognizing they are at risk of losing a critical industry to foreign competition.

In short, it was the week that Hollywood became too big to fail.

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“The American government has never done this,” says Stephen Galloway, dean of the Chapman University film school. “You have the government stepping in and not saying, ‘How can we prevent you from causing damage?’ Instead, they’re saying, ‘How can we prevent you from being damaged?’ That’s a fascinating turn.”

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In both cases, the result is a deepening integration with the state. The Paramount antitrust settlement entails five years of government monitoring and commitments to keep ownership of studio lots, to produce a certain number of films and to install an oversight board as a watchdog for news networks CBS and CNN.

Neither side in the merger battle wanted this outcome. Paramount CEO David Ellison wanted to buy Warner Bros.