Paramount has reached a settlement with California and several other states seeking to block its $110 billion acquisition of Warner Bros. Discovery, clearing one of the final major hurdles standing between the two Hollywood goliaths and their proposed merger.
According to the joint motion filed in federal court on Monday, the settlement includes several key concessions:
– A commitment to release 30 theatrical films per year, with a $30 million penalty for each film the company falls short of that target.
– A requirement to spend $300 million annually, or $1.5 billion over five years, on US-based film production.
– Independent editorial boards for CBS and CNN.
– A five-year firewall requiring Paramount and Warner Bros. to negotiate basic cable affiliate fees separately, with no sharing of confidential rate information.
– Court-enforced remedies for violations of the theatrical release or cable distribution requirements, including the potential divestiture of assets such as Miramax.
– A requirement to preserve both companies’ studio lots, honor all existing collective bargaining agreements, and fund industry workforce training programs under the supervision of an independent monitoring trustee.
In their initial anti-trust lawsuit, the states argued that bringing Paramount and Warner Bros. under the same roof would eliminate too much competition across film and cable television. Led by California Attorney General Rob Bonta, the coalition said the combined company would wield enough market power to raise prices for movies, television distributors, and consumers, while also reducing competition for workers and release dates. Paramount has disputed those claims, maintaining that the merger would instead help it compete more effectively with Netflix and Disney while increasing its overall content output.
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The final contours of the settlement came together over the weekend after four states — Massachusetts, New York, Connecticut and Minnesota — that had initially opposed terms of a deal with California conceded that the legal expense of a prolonged battle was not sustainable.
Federal regulators had already cleared the acquisition, leaving the states’ antitrust case as one of its biggest and final obstacles. The settlement also comes ahead of an October 1st deadline, after which Paramount is on the hook to pay Warner Bros. Discovery shareholders roughly $7 million for each additional day the deal remains unfinished.
The Writers Guild of America had also separately sued to block the merger, arguing it could hurt compensation and working conditions for film and television writers. According to Puck’s Matthew Belloni, though, the WGA has also chosen to settle their suit, with details on that deal still to come.
“We are grateful to Attorney General Bonta and his fellow AGs, as well as the WGA, for engaging in good faith to find a path forward to a resolution that serves all parties, and to Governor Newsom for his support throughout this process,” Paramount CEO David Ellison said in a statement. “Our shared aim was an outcome that best serves consumers, workers and — most importantly — the creative community so vital to the art of visual storytelling. We’re confident this agreement does exactly that, memorializing a series of commitments that include 30+ films annually and expanded U.S. film production to help revitalize our industry here at home.”
“Our goal has always been to build a stronger Hollywood — one with more stories told, greater choice for consumers and stronger competition. That vision was validated by unanimous approval from competition authorities in nearly 70 jurisdictions worldwide, who agreed this deal is pro-competitive, pro-consumer and pro-worker. Having now addressed the State AGs’ and WGA’s concerns, we have complete clearance for this merger and look forward to putting these commitments into action. Bringing Paramount and Warner Bros. Discovery together will build that stronger Hollywood, creating expanded opportunity for our people and even more great entertainment for audiences around the world.”
