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Paramount Skydance has cleared a major legal hurdle to its USD 110 billion acquisition of Warner Bros Discovery after reaching a settlement with a California-led group of US states and a Hollywood writers union, paving the way for one of the largest media mergers in history, Reuters reported.
Under the settlement, Paramount agreed to comply with temporary film quotas and establish a news oversight committee, allowing it to avoid a forced divestment of cable assets, including CNN, or its valuable film franchises. While Warner Bros Discovery shareholders welcomed the settlement, opponents of the merger criticised the deal, arguing that it could hurt jobs in Hollywood. Paramount shares gave up some of their earlier gains on Monday, while Warner Bros Discovery shares jumped more than 10 per cent. The Writers Guild of America settled its parallel case against Paramount, while saying it still believes the deal will damage the industry, as per Reuters. The states settlement also left the union facing the prospect of pursuing the complex legal challenge without support from government enforcers, a case that could have cost millions of dollars. Furthermore, the settlement represents a significant victory for Paramount CEO David Ellison, who spent months battling the states to secure a deal that would substantially consolidate the companys presence across Hollywoods film, television, streaming and news businesses. Calling the settlement "a strong antitrust outcome, California Attorney General Rob Bonta said at a press conference in Los Angeles, "More production, more choice, and guardrails that keep this industry competitive. I don't think these two companies should merge, but that's not something that we are focused on with our resolution here," reported Reuters. As part of the settlement with the states, Paramount committed to increasing film production in the US, including spending at least an additional USD 300 million annually on domestic production and meeting US theatrical release quotas for five years. California Attorney General Rob Bonta said the company would produce 30 films annually during the first two years of the agreement, followed by 32 films a year over the subsequent three years. Each year, at least four of those films must be independent films and at least 20% must be blockbusters. If it falls below that threshold, it will pay USD 30 million per film, most of it into funds to support workers, as per Reuters. Under the settlement, Paramount will also establish a news editorial independence board aimed at safeguarding editorial independence at CBS and CNN. The companies had earlier said the merger is expected to generate USD 6 billion in savings, including through cost reductions that could affect jobs across Hollywood and at the CNN and CBS newsrooms. The combined company is also expected to carry USD 80 billion in debt. (ANI)
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