Paramount clears Warner Bros. deal after California settlement

Paramount is clear to buy Warner Bros. Discovery for $111 billion after settling the lawsuits that tried to stop the deal.

California Attorney General Rob Bonta set out the terms at a news conference on Monday, 21 September. The agreement ends challenges brought by California and 11 other states, plus a separate challenge from the Writers Guild of America, and removes the final hurdle to closing the transaction, according to Deadline.

Bonta stressed the deal is not an endorsement. "This settlement is not a vote of support for this merger," he said. It is "not a blessing for the broader merger." He added: "I don't think these companies should merge."

California and the other states sued in July to block the Paramount-Warner Bros. Discovery deal on antitrust grounds, meaning concerns that the merger would harm competition. The Writers Guild of America, the union representing film and television writers, also sued to block it. The settlement announced Monday addresses both cases.

The core of the agreement is a five-year consent decree, meaning a court-enforced set of promises that lasts five years. The combined organisation currently makes 5% of its films in the United States. It has committed $1.5 billion over five years to lift that share to 20%.

Paramount also agreed to a set number of cinema releases. It will produce 30 theatrical releases in each of the first two years of the decree, rising to 32 films in each of the next three years. At least four of the films must be independent films and 20% must be blockbusters.

There is money for smaller films and workers too. Paramount will establish an indie film fund and pay $9.5 million a year for workforce training to support the labour force behind the cameras.

News operations get separate safeguards. Paramount will establish a news editorial independence board to assure independent fact-based reporting at CNN. The settlement includes an editorial oversight board commitment covering both CNN and CBS News.

What it does not include is a forced break-up. The settlement contained no structural remedies, meaning no requirement to sell off channels, studios or other assets. Paramount has promised to deliver $6 billion in cost savings from the merger.

Time pressure helped push the talks forward. Paramount will owe a $7-million-a-day ticking fee starting 1 October, a late fee that builds each day the deal stays unclosed.

For viewers, this means the deal itself can now proceed. The channel and studio line-ups stay intact for now, while the promises on US film-making, indie support and news independence will be tested over the next five years.