Highlights
- Paramount Skydance has settled lawsuits brought by a coalition of 12 US states and the Writers Guild of America over its Warner Bros Discovery deal
- The company agreed to increase US film production spending by at least $1.5 billion over five years
- Paramount also accepted film-release quotas, theater pricing restrictions and new editorial independence measures for CNN and CBS
Paramount Skydance has cleared a major legal hurdle in its $110 billion acquisition of Warner Bros Discovery after reaching settlements with a coalition of US states and the Writers Guild of America.
The agreement allows the deal to move forward after months of legal opposition over concerns about competition in Hollywood. But Paramount did not get there without making a series of commitments covering film production, theatrical releases, cable negotiations and news operations.
What Paramount agreed to give up
One of the biggest concessions involves the number of movies the combined company must release.
Under the five-year settlement, Paramount has agreed to release at least 30 films a year during the first two years, including at least 20 wide releases. That number rises to 32 films a year for the following three years, with at least 21 wide releases annually.
The company must also release at least four independent films each year during the five-year period.
If Paramount fails to meet the required film output, it could face a $30 million payment for every missed film. The settlement also includes a provision requiring the company to divest Miramax Studios if it fails to meet the film-release commitment.
Paramount has also agreed to spend at least $1.5 billion more on US film production over five years compared with its 2025 spending levels. The agreement includes additional provisions that could require an even greater share of its film production to take place in the US if certain federal and state film tax credits are introduced.
The deal also affects theaters, cable and news
Paramount agreed not to raise rates for theater operators for three years, addressing concerns about the impact of the merger on movie theaters.
The company must also negotiate Paramount's basic cable channels separately from Warner Bros' basic cable channels for five years. The goal is to preserve competition between the two groups when negotiating with cable and satellite providers.
The settlement also requires the combined company to maintain a free streaming service, such as Pluto TV, at its current level of service and quality.
Another major condition concerns journalism. Paramount has agreed to establish a News Editorial Independence Board for CNN and CBS, with the aim of protecting editorial independence following the merger. An independent monitor will oversee the company's compliance with the settlement.
What Paramount avoided
The settlement means Paramount does not have to accept the kind of forced asset sales that had been discussed during the legal battle.
The states had challenged the merger on antitrust grounds, arguing that combining Paramount and Warner Bros would reduce competition across film distribution and basic cable television. The lawsuit sought to stop the merger, while Paramount argued for the transaction to move ahead.
The Writers Guild of America also settled its separate lawsuit as part of the broader resolution. The union had raised concerns about the merger's potential impact on film and television workers.
Paramount CEO David Ellison welcomed the settlement, saying the company's goal was to build “a stronger Hollywood” with more stories, greater consumer choice and stronger competition.
The agreement also helps Paramount avoid a $7 million-a-day fee that would have applied to delays in closing the transaction beyond September 30, according to Reuters.
The Warner Bros deal will create a much larger entertainment company spanning major film, television, streaming and news operations. While the settlement removes a major legal obstacle, the conditions attached to it will shape how the combined company operates in Hollywood over the next several years.
