Paramount Reaches Settlement to End States’ Lawsuit, Paving Way for Merger with Warner Bros. Discovery

They have a deal.

via: Indie Wire

Paramount is set to complete its merger with Warner Bros. Discovery. Paramount settled a lawsuit with a coalition of 12 states by agreeing to a number of concessions, removing the last remaining hurdle preventing Paramount from merging with WBD for $111 billion in the biggest media merger in history.

A deal has not been formally announced by Paramount or California Attorney General Rob Bonta as yet, but Paramount has agreed to some protections that will help the deal advance, among them a commitment to spend an additional $1.5 billion on film production in the state of California over the next five years in an effort to keep the merged company in California and keep the entertainment working community afloat.

Paramount is also reportedly agreeing to a board of journalists that will protect the editorial integrity of CNN and CBS News when the two news outlets fall under the same roof, and there were reports that it will pay penalties if it is unable to distribute 30 movies in theaters every year as CEO David Ellison has repeatedly promised.

Paramount did not respond to a request for comment.

Paramount and Bonta had originally set a date to resume settlement negotiations in October, but background negotiations have moved swiftly as Paramount sought to avoid a ticking fee set to begin on October 1, which would have required Paramount to pay Warner Bros. Discovery shareholders millions of dollars a day until the transaction was closed. Bonta and the other states sued Paramount in July, citing a massive consolidation among the top grossing theatrical films and cable networks.

A combined Paramount and WBD will bring together two legacy film studios, Paramount Pictures and Warner Bros. Pictures; two major streaming services in HBO Max and Paramount+; a large amount of cable channels including HBO, Discovery, Food Network, TNT, TBS, CNN, TCM, and more alongside Paramount’s slate of MTV, Comedy Central, Paramount Network, and many more.

It’s unclear at present whether Paramount has agreed to divest any of its other cable channels in order to advance the transaction, but the need to sustain CNN’s editorial independence has been key for lawmakers and the public.

Since the lawsuit was filed by the states, Paramount has threatened to move its headquarters out of California, eyeing homes like Nashville as potential relocation spots. The pledge to spend an extra $1.5 billion on film production in the state though should help assuage some of those fears and in theory keep both studios and their respective studio lots in the Los Angeles area.

Among the bigger concerns was fewer movies coming to theaters as a result of the merger, something that was seen following the merger of Disney and Fox. Paramount has consistently promised to release 30 films between the two studios and do so over the next three years. Even after the lawsuit that aimed to protect theaters, Paramount received the blessing from the three major theater chains in the country, AMC, Regal, and Cinemark, backing Ellison and his commitment to keep movie product flowing into theaters, as well as a promise to release those films with a window of 45 days before they become available for digital rental or streaming.

Much of the criticism of that promise was that it seemed not just unrealistic but unenforceable, and we’ll see the details of what additional protections were put in place to keep Paramount to its word.