Buried in the Paramount-Warner Bros. Antitrust Complaint: Why Licensing Is Hollywood's Best-Kept Secret

Buried in paragraph 98 of a federal antitrust complaint is one of the strongest arguments anyone has made about the true value of the licensing industry - and it wasn't written by a licensing executive, a trade publication, or a keynote speaker at Licensing Expo. It was written by state attorneys general trying to block a $110 billion Hollywood merger.

In this episode, David Born unpacks what 12 states suing to block the Paramount–Warner Bros. Discovery deal actually reveals about how licensing underwrites the biggest films in the world — and why the industry has been telling its own story the wrong way around.

The conventional narrative says licensing follows a box office hit. The states' argument says the opposite: licensing infrastructure is part of what makes a tentpole film financeable in the first place. David backs that up with three examples that each flip the usual order — AMC's collectible popcorn buckets driving ticket sales, Bluey's licensing earnings rising as BBC Studios cut content spend, and Pop Mart building a Sony feature film off the back of a merchandise program that started with a picture book illustration.

Plus: the Comet x Uno collaboration that sold out in minutes, two Licensing Awards nominations for the Born Licensing team, and David's take on Hollywood vs. AI at the box office.

Topics covered:

• The Paramount–Warner Bros. Discovery merger: where the legal fight stands and what's at stake
• The antitrust paragraph every licensing professional should read — and what it actually says
• Why licensing isn't just downstream of box office success — in some cases, it's what makes the box office possible
• AMC's collectible buckets: when merchandise becomes a reason to buy a ticket, not a reward for buying one
• Bluey and BBC Studios: how licensing earnings rose while content investment fell
• Pop Mart: the licensing program that came first and is now funding the film
• ABG's Care Bears acquisition — and what the CEO said he was actually buying
• Born Licensing's two Licensing Awards nominations

🧠 Key Insight:

Licensing isn’t just a revenue stream. It’s part of the financial engine that makes modern entertainment possible.

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Transcript

There's a sentence sitting in paragraph 98 of antitrust complaint filed last week that I think most people are going to either scroll straight past or not read altogether. It's something I want to stop and sit with for a moment because I think it might be one of the strongest arguments anyone has made about the value of the licensing industry all year. And it wasn't made by a licensing executive or a trade publication or a keynote speaker at Licensing Expo. It was made by a group of state attorneys general in a federal lawsuit about movie theaters and cable television. I'm David born, and this is born to License. Now, those of you who have been listening to the podcast will know that I've been following the Paramount Warner Bros. Discovery merger very closely. 

 It's something that will impact the licensing industry in a very big way. There's been a lot of twists and turns with Netflix winning the bid for Warner Bros. Discovery, then Paramount Switch swooping in to steal it away from them, and loads of bumps along the way. So it seems the bumps are not over just yet. Here's what happened last week. On July 13, 12 states sued to block Paramount Skydance's proposed $110 billion acquisition of Warner Bros. Discovery. The next day, the Writers Guild filed its own separate lawsuit to try to stop the same deal. The Department of Justice, for what it's worth, has already cleared this merger back in June, with no concessions required whatsoever. 

 So one side you've got federal regulators saying that it's fine and a coalition of states and a major union the other side saying it's the biggest antitrust problem Hollywood has seen in a generation. Now, I'm going to give you the headlines on that fight because it matters and it's moving really quickly. But the reason why I wanted to make this episode is buried much different, deeper in the complaint than the headlines. It's a single paragraph about why a new competitor could never break into the business of producing big budget tentpole films. And the reason the states give is that those films don't pay for themselves through box office alone. They're underwritten in part by ancillary revenue, including, you guessed it, consumer products. 

 Licensing regulators in the federal filing just said out loud that our industry, the licensing industry, is a barrier to entry in one of the most valuable markets in entertainment. And that's not something we usually get credited for. So today I want to use this complaint as a jumping off point for a bigger argument I've been wanting to make for a while, which is this licensing has never been Measured properly, we measure it in royalties and retail sales. And by that measure it already looks big. Just not as big as box office subscription services or theme park revenue. But its real value doesn't show up in our numbers at all. It shows up in someone else's numbers. It shows up in the box office revenue. It shows up in shows that have been rewatched for the 10th time on streaming services. 

 It shows up on apps downloaded or theme parks visited. And it's about time we us licensing folk started claiming credit for that. Let me back up a bit and give you the shape of this deal because it's the biggest media merger in Hollywood history and it's worth understanding even if you never touch entertainment licensing directly. Paramount agreed in February to buy Warner Bros. discovery for $31 a share. That combination would bring together two of the five major Hollywood film studios, two of the big four broadcast networks, more than 50 basic cable channels, two of the leading premium cable channels in HBO and Showtime, three streaming services and three television production studios. It's an enormous concentration of intellectual property under one roof. 

 You've got Batman, Harry Potter, Lord of the Rings and the Matrix, Looney Tunes, Scooby Doo from the Warner Bros. side, and then you've got Top Gun, Mission Impossible, the Star Trek franchise, SpongeBob, Nickelodeon from Paramount. Think about that. Nickelodeon, Cartoon Network sitting next to CNN, HGTV and the Food Network. Now the 12 states suing to block it, led by California. They argue the deal would substantially lessen competition in three specific markets. Distribution of wide release theatrical films, distribution of what the industry calls anticipated top grossing or tentpole films, and licensing of basic cable channels to distributors. Their case leans heavily on what happened after Disney bought 20th Century Fox back in 2019. Let's actually look at how the states built this argument. 

 And then they compared that against 2022 through to 2025, deliberately skipping 2020 and 2021 because the pandemic makes these years really useless. For a clean comparison. In that first window, Disney and fox together released 112 wide release films. That's about 28 a year. In the second window, only 54. That's about 13 and a half a year. That's a cut of more than half. And here is the part that really seals it. The states didn't just look at Disney. They ran the same comparison for every other major distributor over the identical four years and found that their combined output only fell by 13%. Disney and Fox fel 52%. That's four times steeper than the rest of the industry over the exact same calendar years. That is not a slow pandemic recovery. 

 That's what happens when you remove a competitor now out of everything in this complaint. Theater economics, cable carriage fees, revenue splits. There's one paragraph that should matter to this audience, the licensing audience, more than any of it. It's the section where the states explain why a brand new competitor could never simply enter the market and start producing tentpole film to replace the competition lost in this merger. And their argument isn't just about visual effect, budgets or soundstage capacity, although it mentions those things too. They specifically point to something else. They say the economics of these films often depend on your revenue streams that a new entrant is unlikely to be able to build at scale in any reasonable timeframe, including international distribution, theme park attractions, and consumer products licensing. 

 A new entrant without these capabilities, in their words, would only ever catch caption a fraction of the revenue that underwrites the production of these films in the first place. So I want you to sit with that for a second. State attorneys general in a federal antitrust filing just told a judge that owning decades of consumer products licensing infrastructure is a genuine competitive moat. Not a nice to have, not a side business, a structural reason that a $200 million franchise film gets greenlit in the first place, and a structural reason nobody else can compete with the studios that already have it. That paragraph is the whole thesis of this episode that you're listening to right now, so let's pull on that thread. 

 The traditional story we tell about licensing around film is that a movie comes out, it does well, merchandise sells, and captures some additional revenue on the back of that success. Licensing is often dwarfed in both revenue and headlines when compared to the movie. A royalty check that shows up once the real business has already happened. But if the states are right, and I think they are, that story has the order backwards. Licensing isn't just downstream of the box office. In some cases, it's part of what makes the box office possible at all, because it's part of the revenue case that gets a film finance in the first place. And we're already seeing a much more literal version of that same idea play out in theaters right now. 

 AMC has gone from selling collectible popcorn buckets tied to nine films back in 2023 to more than five 40 of them this year. Cinemark, Marcus Regal, and B theaters have all followed suit, and AMC's own Vice President of food and beverage strategy has said publicly that attendance measurably increases when a Popular bucket drops. Think about what that actually means. A piece of consumer product merchandise is functioning as a reason to buy a movie ticket, not a reward for buying one. A reason let's move from the cinema to the living room because that same pattern shows up in streaming, just with a longer Runway. 

 Disney put this better than I could in their words earlier this year in their second quarter shareholder letter, they described their competitive strength as the ability to create characters and franchises that turn into what they call a multi decade relationship with an audience, one that spans platforms, geographies and generations. That's not really a statement about content. That's a statement about everything that keeps a franchise alive in someone's mind between seasons and sequels. The toy on the shelf, the ride at the park, the plush kid drags around the house for two years. That's licensing, doing marketing work that Disney plus never has to pay directly for. There's a smaller, even cleaner version of this same story out of the BBC this year. BBC Studios actually cut its content investment this past year, down from around 200 million pounds to about 154 million. 

 And in that same year, the division that houses licensing and consumer products saw its earnings jump 42%, driven specifically by Bluey partnerships and merchandise. Content spending went down, licensing driven, earnings went up. That's about as clean a piece of evidence as you'll find that merchandise isn't just riding on a show's popularity. It's actively sustaining audience engagement and subscriptions, even when new episodes slow down. And here's a case that flips the usual order entirely. Popmart, the company behind the Labubu figures, saw revenue jump 185% in a single year, almost entirely on the strength of merchandise built around a character that started life as an illustration in a picture book. That success has gotten large enough that popmart is now producing a Labu Boo feature film with Sony Pictures. Think about the sequence there. Usually we say content creates the licensing opportunity. 

 In this case, the licensing program came first, proved a market existed, and is now bankrolling the content that everyone assumes should have come before it. Now, I want to end with one where an executive actually said all of this really plainly, because it doesn't happen often. Authentic Brands Group just signed a deal to acquire the Care Bears franchise, a brand that's on track to do more than $750 million in retail sales this year alone. And when ABG CEO Corey Salter explained why the deal made sense, he didn't lead with nostalgia or storytelling potential. He described Care Bears as arriving with in his words, a vast of more than 500 licensing partners and a devoted fan base that keeps growing. The licensing network came first in that sentence. Not the content pipeline, not the fan sentiment, the 500 licensing partners. 

 And that's the whole argument of this episode. Corey was explaining plainly what he was actually buying, fully acknowledging the true value of a strong licensing business. Now, going back to the merger, there were ambitions for it to close this month, but that won't happen now. Who knows how long this could go for? A few more months at least. Probably. There is still a chance this couldn't happen. The coverage will continue to focus on the big glamorous stories, but buried inside that complaint from the states is a group of regulators that have reminded us of the true value of licensing. They said it underwrites the films that get made. Licensing has never just been about that royalty check that shows up after the real business happens. In a lot of cases, it's the reason the real business happens at all. 

 Now, before we wrap up, a few other things I'm following this week. Did anyone see the collaboration between shoe brand Comet and Mattel's Uno? It sold out in minutes and was another licensed product that went viral. I loved how the IP was applied to that product and the packaging. Go take a look at that if you haven't already. That's the Comet and Uno collaboration. In other news, big congrats to my team at Born Licensing, who's been nominated for two licensing awards this week. One was for the Sainsbury's Christmas campaign we worked on last year, which starred the bfg, and the other was another Christmas campaign also last year that was with Google Pixel, which licensed the iconic film Love. Actually, we'll find out on the evening of September 8th in London if either of them win the best licensed Promotions campaign category. 

 And my LinkedIn has been popping this week. I think I annoyed a few people about my post about the AI film that's being made on a shoestring budget that's going up against Christopher Nolan's 200 million blockbuster the Odyssey. I have put my money on Hollywood and I made that really clear. Hollywood is going to beat AI in this matchup. But look, it's a touchy subject. Someone even accused me of clickbaiting. I don't do clickbait. Okay, but look, if you're not following me on LinkedIn, you certainly should be. I'm also on Instagram. Come on over and see how I'm living my best life in la. Until next time, I'm David born and this is born to license.