Paramount settles with US states, clearing way for Warner Bros merger

In short: Paramount has reached a legal settlement with a group of US states opposed to its $US81 billion merger with Warner Bros Discovery. Opponents in the movie industry said the combined company would slash jobs in Hollywood and reduce the number of films produced every year. What's next? As part of the settlement, Paramount has pledged to increase film production and commit millions of dollars towards supporting workers. Paramount has reached a settlement with a group of US states, clearing the way for its takeover of Warner Bros Discovery and creating a Hollywood empire spanning television, news and cinema. Paramount, which is run by David Ellison, whose ultra-wealthy family has ties to US President Donald Trump, won a bidding war against Netflix in February for control of a stable of assets that includes Warner Bros Pictures, CNN and the HBO Max streaming service. The Trump administration approved the deal, one of the largest media mergers in years, in June without demanding a change to its business, before 12 US states sued to block the transaction. Financing for the deal reportedly includes about $US24 billion ($33.7 billion) in equity from the sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi. David Ellison's father, billionaire Oracle founder Larry Ellison, also provided funding and a guarantee. Opponents in the movie industry said the combined company would slash jobs in a Hollywood already under pressure and reduce the number of films produced every year, while news media groups feared CNN's independence could be compromised. The deal includes several safeguards on these issues, including a board meant to protect CNN's editorial independence. The news came just days after Mr Trump banned CNN, Politico and MS NOW from the White House. The outlets are suing the administration to have the decision reversed. Paramount had threatened to move out of California if the state's attorney-general, Rob Bonta, did not negotiate an end to the lawsuit. In their complaint, the 12 states argued the combined company would control roughly 27 per cent of wide-release theatrical film distribution and a similar percentage of the basic cable channel industry. California led the lawsuit and was joined by Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington, all of which are Democratic-led states. Four states — Massachusetts, New York, Connecticut and Minnesota — had held out but concluded that fighting on without California was not worth the expense, Bloomberg reported. Mr Bonta told reporters the agreement was about "protecting people's careers" but maintained it was not a vote in support of the merger. "I don't think these two companies should merge … but that's not something that we are focused on with our resolution here," he said. "My job as attorney-general is to look at the facts and look at the law, weigh the options in front of us, and make the best decisions for the people of California." Mr Ellison welcomed the settlement, which he said marked "complete clearance for this merger". He added that "bringing Paramount and Warner Bros Discovery together will build that stronger Hollywood, creating expanded opportunity for our people and even more great entertainment for audiences around the world". Terms of the agreement Mr Bonta said the settlement includes a commitment that the merged studio would produce 30 movies in each of the first two years of the deal, and 32 movies in each of the following three years. At least four of those films must be independent productions, and at least 20 per cent must be blockbusters, Mr Bonta said. The terms include a financial penalty if Paramount fails to meet the targets. According to a joint court filing, the deal also requires at least $US300 million more in annual spending on US film production by Paramount and Warner Bros than in 2025. The companies must also keep both studios' production lots, honour labour agreements and commit funds to workforce training, the filing said. It also creates a News Editorial Independence Board to set editorial principles for the combined company's news channels, including CNN. Compliance would be overseen by an internal monitor, an independent trustee and a committee of five states, with the court retaining jurisdiction over enforcement. Writers guild says merger will damage industry The Writers Guild of America (WGA) also filed a lawsuit, and both challenges were headed toward a full antitrust trial set to kick off in March. The WGA separately confirmed Monday that it had also settled its case. "We continue to believe the merger will cause damage to writers and the industry at large," the guild said in a statement. "However, as a non-profit, the WGA must contend with the reality of forging ahead alone with no backing from government enforcers, with a complex antitrust lawsuit that would cost millions of dollars to pursue through trial." The union added that Paramount had agreed to prohibit writer lay-offs at CBS News for five years and to pay $US17.5 million to WGA's health fund, along with attorneys' fees from the litigation. AFP/AP