Paramount settles with state AGs over Warner Bros. merger

Several states sued to block the merger in July, claiming Paramount and Warner Bros. would account for a quarter of Hollywood's revenue if they're allowed to merge.(CN) — Paramount Skydance Corporation has settled with a group of state attorneys general that sought to block the $110 billion merger of the media giant with Warner Bros. Discovery, California Attorney General Rob Bonta announced Monday.“With this settlement, Paramount has made an enforceable commitment to significantly increase domestic production, production in the United States and necessarily production right here, in LA, in Hollywood. More jobs, more economic activity, better for workers, more output when it comes to movies,” Bonta said at a press conference announcing the deal.Under the agreement, the combined entity will spend at least $300 million more each year in domestic production, according to Bonta. The company will also be required to produce 30 movies for the first two years of the deal, then 32 movies for each of the following three years, with at least four of the films each year being independent.The deal also requires Paramount to honor previously established collective bargaining agreements and bargain in good faith with unions, Bonta said, along with establishing an independent film fund and paying $9.5 million annually for workforce training and community arts organizations.Paramount will further create a news editorial independence board to “monitor adherence to ethical journalism” at CBS News and CNN and require Paramount and Warner Bros. to negotiate their cable packages separately.The agreement will last for five years and will be overseen by an independent monitor. A judge will have to sign off on the deal before it becomes official.“I want to stress what this settlement means: more production here at home, and more means more work here in California, right here in the Golden State. That’s what the settlement is all about: protecting people’s careers, the lives they’ve built here in California, the livelihoods their families rely on,” Bonta said.Representatives for Paramount and Warner Bros. did not immediately respond to a request for comment.Paramount reached a deal to acquire Warner Bros. in late February, with both companies contending the merger would benefit consumers and encourage growth in the industry.A coalition of states led by California filed suit against the companies on July 13, nine days before the merger was originally set to be finalized. The states argued the $110 billion purchase of Warner Bros. by Paramount violated the Clayton Antitrust Act. The merger would create a powerhouse that would control about a third of theatrical motion pictures and almost a third of basic cable programming, they said.On July 14, the Writers Guild of America also sued the companies over the merger’s purported anticompetitive effects on film industry employees. Bonta said the Writers Guild separately reached a settlement with Paramount over the weekend, but no additional details were immediately available.A representative for the Writers Guild of America did not immediately respond to a request for comment.U.S. District Judge Araceli Martínez-Olguín in the Northern District of California oversaw both cases.The Joe Biden appointee temporarily blocked the merger on July 20, finding the states demonstrated a merger between the two companies would substantially lessen competition.The judge granted the states’ request for a temporary restraining order, noting they supported their Clayton Antitrust Act claims with expert evidence on the effects the merger would have on wide-release theatrical films, the distribution of anticipated top-grossing theatrical films and licensing of basic cable channels to distributors.On July 24, Paramount and Warner Bros. agreed to delay their proposed merger while the dual legal challenges unfold, pausing the deal until either five days after a court decides on the merits of the challenges or June 1, 2027, whichever came first.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads