Paramount Skydance on Monday reached a settlement with California and 11 other states that had sued to stop its US$110 billion acquisition of Warner Bros Discovery, paving the way for one of the largest media mergers in history. The settlement includes bringing more film production to the US — spending at least US$300 million more each year in domestic production — and an agreement to boost annual film releases progressively after the deal closes, California Attorney General Rob Bonta said in a press conference. The company will produce 30 movies in each of the first two years of the deal, and 32 movies in each of the following three years, Bonta said. Each year, at least four of those films must be independent films and at least 20 per cent must be blockbusters. Under the settlement terms, Paramount will also establish a news editorial independence board to ensure editorial independence at the CBS and CNN networks, Bonta said. The settlement caps months of regulatory and legal wrangling over a deal that would dramatically concentrate power across Hollywood’s film, TV, streaming and news businesses. By securing concessions aimed at preserving newsroom independence and maintaining movie production, Paramount appears to have addressed some of the concerns, bringing the two companies closer to completing a merger that will create one of the world’s largest media and entertainment groups. Shares of Paramount were up more than eight per cent on Monday, while Warner Bros Discovery surged more than 10 per cent. Reuters first reported on Friday that Paramount and the states could settle as soon as the weekend. While Trump administration regulators cleared the deal, a coalition of 12 state attorneys general, led by California’s Rob Bonta, sued in July to block the merger, arguing it would reduce competition and create a media behemoth with the power to raise prices in movies and television. The companies said earlier this year the merger will mean US$6 billion in savings, through moves including cost cuts that would likely affect jobs across Hollywood as well as the CNN and CBS newsrooms. The combined company is expected to hold US$80 billion in debt. A settlement with the states will help Paramount avoid a US$7 million-a-day “ticking fee” it owes Warner Bros shareholders for each day the deal does not close past September 30. The Writers Guild of America, which had also sued to stop the deal arguing it would decrease pay and worsen working conditions for film and TV writers, has reached a settlement with Paramount, a source familiar with the matter told Reuters. The union 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 settlement includes a US$17.5 million healthcare fund and protections for workers at CBS and CNN, the source said. The Writers Guild of America did not immediately respond to a Reuters request for comment on its settlement. Antitrust regulators in other jurisdictions globally, including the European Union and Britain, have already cleared the deal. A cleared Paramount-Warner deal suggests regulators may be more open to media consolidation as companies scale up to compete with Netflix and Walt Disney. It also raises fresh questions about concentration in news, sports and entertainment. --- Reporting by Jody Godoy in New York, Deborah Sophia and Anhata Rooprai in Bengaluru; Editing by Sriraj Kalluvila, Devika Syamnath and Joyjeet Das
