Hollywood mogul Michael Hackman, once riding high on massive studio investments, now faces a potentially catastrophic blow amid the industry slowdown and Netflix and Paramount’s battle for dominance.
Hackman, 69, founded Hackman Capital Partners in 1986 and, as CEO, has poured billions into more than 60 soundstages for film, television and audio production across California, New York, Toronto, the UK and Ireland.
In Los Angeles alone, he owns six massive studio properties that have hosted hit shows including Seinfeld, Parks and Recreation and Big Brother.
Earlier this month, Netflix made an $82.7 billion move to acquire Warner Bros. Discovery’s studios, its HBO and HBO Max streaming businesses and its vast content library.
Just days later, Paramount Skydance launched an aggressive $108 billion all-cash counteroffer to acquire all of Warner Bros.’ assets, including CNN, TBS and TNT.
While the situation remains unresolved, Warner’s board has not scrapped its Netflix deal and is reviewing both offers to determine what’s best for shareholders.
But the entertainment slowdown has already battered Hackman’s company, and the ongoing clash between the two streaming giants may push the Hollywood boss to the edge.
‘The whole ecosystem is really under distress,’ Hackman told The Wall Street Journal.
He is now taking hit after hit, squeezed from every direction – fewer productions, empty studios, lower rents, rising debt costs and the looming media merger.
‘The industry is evolving,’ Hackman added. ‘We can’t stay passive.’
Fifteen years ago, Netflix, Disney and Amazon’s record content commissions kickstarted the streaming boom we see today.
The boom prompted a handful of property developers to seize the opportunity and race to build soundstages across the US between 2017 and 2019. In just those two years, millions of square feet of studio space were constructed for various projects.
The pandemic sparked a second wave, with viewers streaming content at astronomical rates from home.
In Hackman’s own words, production companies were ‘shooting money out of a cannon,’ as reported by WSJ.
Hackman, initially an industrial and real estate developer, moved into studio ownership in 2014, adding more than two million square feet of soundstages worldwide.
His bets on studio investments paid off for years, as the streaming surge kept stages occupied worldwide. But now, with spending slowed, many are empty or bringing in minimal rent.
On top of that, Hackman borrowed hundreds of millions of dollars when interest rates were much lower, but those debts are now becoming increasingly difficult and costly to manage.
Now, the potential major media merger has only threatened to worsen the financial strain on the Los Angeles-based firm.
Whether Netflix or Paramount wins the hostile bid, Hollywood consolidation is likely to speed up. Big companies tend to lean on existing libraries instead of creating new content, and Warner already controls extensive studio facilities.
With its vast content library and studio real estate, a merged company – regardless of who leads it – will likely rely on Warner’s own studios rather than renting space from investors like Hackman.
Hackman told the WSJ that despite challenges, the company remains financially strong, with nearly $500 million in cash and half its portfolio debt-free.
He believes the streaming battle shows investors still value top-tier content, but admitted that if the boom fades, studio landlords like himself may have to repurpose their soundstages.
Hackman said repurposing could include anything from live events to movie-themed attractions, pointing to Warner’s Making of Harry Potter tour just outside London.
Nevertheless, the soundstage leader has appealed to President Donald Trump’s administration for support, seeking incentives such as tariffs and tax breaks to stay competitive in the industry.
Cheaper labor abroad has also strained the entertainment economy, driving production to Europe, Canada and Australia, where generous incentives were offered.
‘A lot is going to depend on support from the government helping to offset some of these advantages they have outside the US,’ Hackman told the outlet.
Affinity Partners, a private equity firm led by Trump’s son-in-law Jared Kushner, was revealed as a backer of the $108 billion hostile takeover announced earlier this month.
Trump cast doubt on the Netflix-Warner merger last week, cautioning that the combined market share might trigger antitrust scrutiny.
He confirmed reporting from Bloomberg in the process, revealing he had a meeting with Netflix co-CEO Ted Sarandos in the Oval Office before the streamer announced its winning bid.
Sarandos sought to convince the president that Netflix acquiring Warner’s streaming assets and film studio would not constitute a monopoly, Bloomberg reported.
Netflix has a market capitalization of around $400billion, whereas Paramount’s sits at roughly $15billion.
Paramount’s offer, meanwhile, is for $30-per-share, while Netflix’s came in at $27.75.
The end of the 2023 writers’ and actors’ strikes also brought a plunge – not the anticipated boom – for the streaming industry.
Three key factors fueled the slowdown: cost-cutting by studios, a focus on profitability over subscriber growth, and foreign competitors offering better incentives.
US film and TV projects with budgets of $40 million or more saw a nearly 30 percent drop in shoots in 2024 versus 2022, declining another 12 percent through November, according to ProdProp.
‘It’s spread out,’ John Kim, analyst with BMO Capital Markets, told the WSJ. ‘Even though content companies are based in Los Angeles, they can produce anywhere globally.’
In response, Hackman is restructuring debt on several studios and scaling back expansion plans. The first phase of a campus near Dublin has already been reduced, according to the outlet.
Another major concern is a $1.1 billion Goldman Sachs loan for Radford Studio Center, purchased in 2021 as part of a $1.8 billion CBS studio deal and home to shows like Entertainment Tonight.
Hackman fell short on the debt, though he told the WSJ that an agreement with Goldman Sachs is nearly finalized.
Read more
- Will Jared Kushner’s Affinity Partners shake up Hollywood with a $108billion Paramount-backed attempt to seize Warner Bros. Discovery from Netflix?
- Is Hollywood’s golden future on a knife-edge with Paramount-Skydance crashing Netflix’s trailblazing bid for Warner Bros Discovery?
- Will Netflix’s colossal $72 billion deal for Warner Bros reshape streaming—sparking creativity or stifling competition?
- Could Paramount’s aggressive cash offer spark a seismic shift for Warner Bros., eclipsing Netflix’s mega-deal?
- Will power-player Paramount leave Netflix and Disney gasping in its $108 billion pursuit to seize the Warner Bros crown and its HBO jewel this December?
