Paramount Wins Warner Bros Takeover After Settling States, Union Lawsuits

Paramount Skydance emerged victorious from a legal battle over its $110 billion acquisition of Warner Bros Discovery after settling with a California-led group of US states and a Hollywood writers union, paving the way for one of the largest media mergers in history.

 

The settlement marks a major win for Paramount CEO David Ellison, who battled the states for months to finalise a deal that would significantly concentrate power across Hollywood's film, television, streaming and news businesses.

 

Paramount agreed to abide by temporary film quotas and establish a news editorial independence board, avoiding a forced sale of cable assets such as CNN or any of its major film franchises.

 

The settlement was welcomed by Warner Bros shareholders but drew criticism from opponents of the merger, who said it could hurt Hollywood jobs. Shares of Paramount pared back earlier gains on Monday, while Warner Bros Discovery surged more than 10%.

 

The Writers Guild of America settled its parallel case against Paramount while maintaining that it still believed the deal would damage the industry. The states' settlement left the union to contend with the case without government backing in litigation that could have cost millions of dollars.

 

California Attorney General Rob Bonta called the settlement "a strong antitrust outcome". "More production, more choice, and guardrails that keep this industry competitive. I don't think these two companies should merge, but that's not something that we are focused on with our resolution here," he said at a press conference in Los Angeles.

 

Production Commitments

 

Under the state settlement, Paramount promised to bring more film production to the US by spending at least $300 million more each year on domestic production and adhering to US theatrical release quotas for five years.

 

The company will release at least 30 theatrical films in each of the first two years of the agreement and 32 films in each of the following three years, Bonta said. Each year, at least four of those films must be independent productions and at least 20% must be blockbusters.

 

If Paramount falls below the required annual threshold, it will pay $30 million for each film missed, with much of the money directed towards funds supporting industry workers. The company also agreed not to raise rates charged to cinema operators for three years.

 

Under the settlement, Paramount will establish a News Editorial Independence Board to help ensure editorial independence at CBS and CNN.

 

Reuters first reported on Friday that Paramount and the states could settle as soon as the weekend.

 

Ellison thanked the states and California Governor Gavin Newsom for his support throughout the process.

 

"Our goal has always been to build a stronger Hollywood — one with more stories told, greater choice for consumers and stronger competition," he said in a statement.

 

States Challenged Merger

 

While Trump administration regulators cleared the deal, a coalition of 12 state attorneys general, led by California's Bonta, sued in July to block the merger. They argued that it would reduce competition and create a media behemoth with the power to raise prices for movies and television.

 

The Writers Guild also sued to stop the deal, arguing that it would reduce pay and worsen working conditions for film and television writers.

 

The companies said earlier this year that the merger would generate $6 billion in savings through measures including cost cuts that could affect jobs across Hollywood as well as in the CNN and CBS newsrooms. The combined company is expected to carry about $80 billion in debt.

 

The settlement also helps Paramount avoid a $7 million-a-day "ticking fee" that it would have owed Warner shareholders for each day the deal remained incomplete beyond September 30.

 

Antitrust regulators in other jurisdictions, including the European Union and Britain, have already cleared the deal.