Business · updated 1h ago · 2 min read
Paramount Skydance Settles With California And 11 States, Clearing Warner Bros Discovery Merger
Settlement with California and 11 states ends antitrust suit blocking Warner Bros. discovery deal Allows Paramount Skydance to proceed with $110 billion merger; closing path cleared
Whether the settlement requires major divestitures.
5 of 7 outlets skipped it: independent editorial boards for CNN and CBS are included.
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Variety
“The discussions also focused on editorial oversight of CBS News and CNN, a key concern for East Coast attorneys general.”Read the original ↗
The Hollywood Reporter
“It’s believed a sticking point for the states in any settlement involved Paramount operating the two studios as independent businesses and selling off parts of its cable business.”Read the original ↗
It shifts emphasis from structural remedies to newsroom/behavioural safeguards.
Settlement clears a hurdle
Paramount Skydance settled with California and 11 other states that sued to block its $110 billion acquisition of Warner Bros Discovery, clearing one of the last big hurdles to closing the deal, a source familiar with the matter said on Monday. The settlement includes the creation of independent editorial boards for CNN and CBS and a $30 million penalty per film for any shortfall against Paramount's pledge to release 30 movies annually. The settlement caps months of regulatory and legal wrangling over a deal that would concentrate power across Hollywood's film, TV, streaming and news businesses.
Shares of Paramount were up more than 8% on Monday, while Warner Bros Discovery surged more than 10%. The settlement helps Paramount avoid a $7 million-a-day "ticking fee" it owes Warner Bros shareholders for each day the deal does not close past September 30.
Independent boards, film targets
Paramount agreed to pay a $30 million penalty per film if it falls short of its pledge to release 30 movies annually, according to Reuters.
Paramount agreed to pay a penalty if the company fails to make good on a promise to distribute 30 films per year in theaters and to spend $1.5 billion on film production in Hollywood over the next five years.
The settlement includes independent editorial boards for CNN and CBS, while the deal would reshape Hollywood by combining HBO Max and Paramount+ streaming services and by giving Paramount ownership of dozens of cable television channels including CNN.
A federal judge must approve the agreement before Paramount can finalize its purchase of Warner Bros. Discovery.
The Writers Guild of America has also sued to stop the deal, arguing it would decrease pay and worsen working conditions for film and television writers.
What remains at stake
The Writers Guild of America warned in July that a combined Paramount-Warner Bros entity would have "both the incentive and the ability to lower costs by suppressing writers' wages and reducing output."
The final hurdle will be some trade unions with a similar lawsuit outstanding, and Morningstar analyst Matthew Dolgin said they would be hard pressed to hold up the deal without paying the bond that Paramount requested.
Ellison threatened to move his studio from its historic Melrose Avenue address to Texas or Tennessee, and Paramount's board approved David Ellison's contingency plan to move headquarters from Hollywood as early as this fall.
The combined company is expected to hold $80 billion in debt, and Paramount earlier this year said the merger will mean $6 billion in savings.
Paramount is on the hook to pay Warner investors a "ticking fee" of 25 cents per quarter, per share until the deal closed, beginning Oct. 1.