Paramount has secured a settlement with the coalition of 12 state attorneys general who had sued to block its merger with Warner Brothers, California Attorney General Rob Bonta announced Monday.
The settlement, if approved by the court, resolves the lawsuit alleging that the merger of Paramount Skydance Corp. and Warner Brothers Discovery, Inc. would harm competition by lowering output and raising prices, hurting both workers and consumers in the process.
The settlement “resolves antitrust concerns, protects the livelihoods of Hollywood workers, and guarantees massive investments in domestic film production,” Bonta’s office said in a press release detailing key terms agreed to by Paramount, including:
- A five-year court enforceable commitment to increase film output.
- A minimum of an additional $1.5 billion commitment to bolster domestic film production.
- A $47.5 million fund for workers who are impacted by the merger.
- Restrictions on how the company handles cable negotiations to help keep prices competitive.
- Formation of a News Editorial Independence Board “to establish guiding editorial and journalism principles for the combined entity’s news channels.”
During the five-year term, Paramount commits the merged company to release:
- 30 films a year, including 20 wide releases, in the first two years.
- 32 films a year, with 21 wide releases, in years three, four, and five.
- At least four independent films in each year of the commitment period.
If Paramount fails to meet this film output requirement in any year, the it will be required to divest Miramax Studios and pay $30 million per missed film toward the healthcare and retirement trust funds associated with entertainment industry unions and the National Association of Attorneys General.
Additionally, Paramount will have to increase its domestic spending by far more than the $1.5 billion minimum, if film tax credits are signed into law.
Currently, about five percent of Paramount’s film production is in the U.S. But, if a federal film tax credit of at least 20% is passed, Paramount would be required to increase U.S. production to 30% of its total – and 40%, if either California or New York pass similar tax credits.
“Let me be clear: This settlement is not a vote of support for this merger,” AG Bonta clarified in his press release. Instead, he said, it merely resolves major concerns raised by the merger.
Nonetheless, leaders of several major unions, such as SAG-AFTRA and those for writers and directors, praised the settlement in the press release.
Thanks to Monday’s settlement, it appears that the merger will take place, since a separate lawsuit filed by the Writers of America is now likely to be dropped and the Justice Department previously determined that the merger would not result in antitrust violations.
