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Paramount And State AGs Strike Deal For Warner Bros. Merger
Here we go // GIF by Kate Walker
Paramount has settled the antitrust lawsuit filed by 12 state AGs, clearing the path for the company to finally complete its merger with Warner Bros. Discovery — the largest in Hollywood history.
The Big Picture: Things were getting heated between Paramount and the AGs, with the David Ellison-run studio threatening to leave California if it couldn’t merge with the rival Hollywood conglomerate — especially with a $7 million/day ticking fee set to kick in on October 1st. That could’ve been catastrophic for the LA economy and created a ripple effect across the entertainment industry. On the other hand, greenlighting the merger shows that the era of consolidation isn’t going anywhere.
Behind The Scenes: After a weekend of negotiations, Paramount and the AGs have come to terms on what it’ll take to get the Ellison super-merger done… at least for the next five years.
Paramount must invest $300 million annually in American film and TV production. It must also have 20% to 40% of its projects shoot in the US if a federal film-production tax credit passes.
The company will need to release at least 30 movies annually in years one and two and 32 movies in years three to five — the makeup of which will be mostly wide-release movies.
In TV, each studio will be required to negotiate separately for the distribution of basic cable channels owned by Paramount and Warner Bros. It’ll also need to honor existing affiliate and distribution agreements with outlets.
It must set aside a $47.5 million fund to provide career support for workers it lays off and create a “news editorial independence board” to oversee CNN and CBS News.
Paramount will also, of course, stay in California and not sell either the Paramount or Warner Bros. studio lots.
Closing Thoughts: If Paramount fails to keep those promises, it’ll be forced to pay fees ($30 million for each movie it doesn’t make) or make some divestitures (offloading its 49% stake in Miramax or selling some of its various cable assets) — all of which would be legally binding under a consent decree once a judge signs off.
While many in Washington and the creative community were pushing for the AGs to accept only structural remedies to allow the merger to go through, the battle over Paramount became a political football in California politics. No sitting or aspiring officeholder wanted to be responsible for job losses in the state — or for having a major studio leave California for the first time. That’s hard to explain on the campaign trail.
Coming Soon: Notably, the settlement requirements only last for five years, officially running through December 31, 2031. While the cynical take is that Ellison will make some big changes come 2032, it’s possible he’ll mostly just maintain the status quo — he already got what he wanted.
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Today’s email was written by David Vendrell.
Edited by Nick Comney. Polled and Copy-edited by Kait Cunniff.
Published by Darline Salazar.