3 hrs ago
Paramount Settles States’ Lawsuit, Clearing Warner Bros Discovery Deal
Paramount Skydance wants to buy Warner Bros Discovery for $110 billion.
Twelve U.S. states sued because they worried the deal would make one company too powerful in entertainment.
The companies and states have now reached a settlement, according to a source cited by Reuters.
The agreement would create independent boards for CNN and CBS news operations.
Paramount would also have to release 30 movies each year after the merger.
It would pay $30 million for every movie missing from that target.
The settlement could allow the deal to move forward.
Regulators in the European Union and Britain have already approved the acquisition.
Paramount Skydance settled with California and 11 other states that sued to block its $110 billion Warner Bros Discovery acquisition.
The agreement would create independent editorial boards for CNN and CBS to protect their news operations’ independence.
Paramount would face a $30 million penalty for each movie below its post-merger pledge to release 30 films annually.
The settlement removes a major obstacle, but Paramount must avoid a $7 million daily fee if the deal closes after September 30.
The states had argued the merger would reduce competition and give the combined company greater power to raise movie and television prices.
- Who
- Paramount Skydance, Warner Bros Discovery, and a coalition of 12 state attorneys general led by California Attorney General Rob Bonta.
- What
- The parties settled a lawsuit seeking to block Paramount Skydance’s proposed $110 billion acquisition of Warner Bros Discovery.
- Where
- The lawsuit was brought in the United States by California and 11 other states; the acquisition also requires reviews in other jurisdictions.
- When
- The settlement was reported on September 21; the states sued in July, and a $7 million daily fee could apply after September 30 if the deal remains unclosed.
- Why
- The states argued the merger could reduce competition and give the combined company more power to raise movie and television prices.
State Antitrust Concerns
Merger Supporters and Regulators
Competition and market power
State Antitrust Concerns
The coalition of 12 state attorneys general argued that the merger would reduce competition and create a media company powerful enough to raise prices for movies and television.
Merger Supporters and Regulators
Paramount Skydance and Warner Bros Discovery are pursuing the combination of two major film studios, streaming services, and cable-news operations, while U.S. regulators cleared the deal.
Newsroom independence
State Antitrust Concerns
The lawsuit and settlement discussions prompted concerns about how the combined owner might affect CNN’s news operations.
Merger Supporters and Regulators
The settlement would establish independent editorial boards for CNN and CBS as a safeguard for their news operations.
Theatrical film production
State Antitrust Concerns
The states sought conditions to ensure the combined company would maintain a substantial level of film production, including penalties for falling short.
Merger Supporters and Regulators
Paramount would commit to releasing 30 movies annually and pay $30 million for each film below that target.
Key facts
- Deal value
- $110 billion
- States involved
- California and 11 other states
- News safeguards
- Independent editorial boards for CNN and CBS
- Annual film commitment
- Paramount pledged to release 30 movies annually after the merger
- Penalty for film shortfall
- $30 million per movie below the annual target
- Potential delay fee
- $7 million per day owed to Warner Bros shareholders after September 30 if the deal does not close
- Other approvals
- The European Union and Britain have already cleared the acquisition
Quotes
Writers Guild of America
Union representing writers that separately challenged the merger
“Now that the Attorneys General have settled with Paramount, however, as a nonprofit, the WGA must contend with the reality of forging ahead alone, with no backing from government enforcers, with a complex antitrust lawsuit that would cost millions of dollars to pursue through trial.”
livemint.com
“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.”
livemint.com
Rob Bonta
California attorney general who led the states’ lawsuit
“I don’t think these two companies should merge, but that’s not something that we are focused on with our resolution here.”
livemint.com
Sources
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