Variety: Warner Bros. and Sony Drop Rivalry and Join Forces Behind Las Vegas Studio

Story from Variety:

Warner Bros. Discovery and Sony Pictures have ended their competition in Nevada and joined forces behind a new studio project in the Las Vegas suburbs.

Last year, the companies were backing rival projects, both of which would have required state tax incentives to get off the ground.

But in recent weeks, Warner Bros. dropped its support for a facility at a UNLV business park in southwest Las Vegas. On Wednesday, the company announced that it will instead partner with Sony on its $400 million studio project in Summerlin.

Assemblywoman Sandra Jauregui, who is sponsoring the Summerlin project in the Nevada Legislature, hailed the development in a statement: “We are the entertainment capital of the world, and there is no better example of that than this partnership between two of the world’s major film and television studios.”

The Summerlin project requires at least $80 million per year in Nevada tax credits, which still must be approved by the Legislature and the governor.

Lawmakers rejected a bill in 2023 that would have supported both studios at an annual cost of $190 million. Since then, it has been clear that there was only appetite for one project, at most.

Warner Bros. partnered last year with Birtcher Development on its plans for a project with 12-14 soundstages at the UNLV Harry Reid Research and Technology Park. At the time, the studio pledged a major commitment of at least $8.5 billion in spending at the facility over 17 years.

Sony pursued a smaller project in partnership with Howard Hughes Holdings, the developer of the Summerlin planned community. That studio would have 10 soundstages, though it would be part of a larger commercial development including hotels and retail space.

The two sides commissioned competing economic studies as they geared up to make their case to lawmakers in this year’s session. Sony’s allies noted that the company has a “rock solid balance sheet” — in evident contrast to Warner Bros. — while Warner Bros. emphasized its scale, inviting comparison to the smaller Sony.

Earlier this month, Gov. Joe Lombardo, a Republican, expressed skepticism about subsidizing the film industry in an interview with KTNV.

“And I just don’t see that being good policy, good investments for the constituents and the state of Nevada,” he said. “And you also have to be really careful in trying to convince the public it’s a good way to do business when they see that there’s such massive companies and there’s a need in there.”

The state previously committed $1.1 billion in subsidies for stadiums to lure the Oakland A’s and the Oakland Raiders, leaving some lawmakers leery of a major commitment to Hollywood.

In abandoning the Birtcher project, Warner Bros. will have to scale back its ambitions in the state. The company was originally seeking around $100 million a year in subsidies for production at that facility.

Jauregui wants $80 million annually for the Summerlin studio, plus $25 million to incentivize productions at other locations. Adding Warner Bros. to the mix may cause the $80 million figure to rise somewhat, though the company would have to share that allotment with Sony.

Nevada currently offers $10 million a year in production incentives, which is not enough to compete with California, New Mexico and other states where production is heavily subsidized.

Simon Robinson, the chief operating officer of Warner Bros. Discovery, said in a statement that he still believes Las Vegas could serve as a third “hub” for the company, after Burbank and London.

Tony Vinciquerra, chairman of Sony Pictures Entertainment, said is “thrilled” by the partnership, adding that “this unique and powerful collaboration will lay the foundation for a thriving film and television production industry in the Silver State.”

Sen. Roberta Lange, who is backing the Birtcher project at the UNLV campus, said the project is still moving forward with Manhattan Beach Studios as its partner. She said that Warner Bros.’ withdrawal from the project will not affect her bill, which is expected to have a public hearing in March.

“I will work diligently to make sure we have a bill that will move forward,” she said. “In my humble opinion, it doesn’t take too much to bring these bills together. We have to figure out.”

Jauregui’s bill is set for a hearing on Thursday.