Paramount has reached a settlement with a coalition of 12 attorneys general that would resolve the states' antitrust lawsuit alleging that the $111 billion merger of Paramount and Warner Bros. Discovery (Warner Bros.) would harm competition by lowering output and raising prices, hurting both workers and consumers in the process.
Separately the writers unions announced a settlement with Paramount that will prevent writer layoffs at CBS News for five years.
The settlement, which still must be approved by the court, includes 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, and restrictions on how the company handles cable negotiations to help keep prices competitive.
In the wake of the settlement, Paramount is likely to move as quickly as possible to close the deal because it had promised to pay $7 million a day to shareholders if the merger didn’t close by Oct. 1.
According to the 12 AGs who brought the suit the settlement includes:
- An Annual Film Release Commitment: Paramount has agreed to a five-year term, where the merged company will commit to release 30 films a year, including 20 wide releases, in the first two years and 32 films a year, with 21 wide releases. in years three, four, and five. Paramount commits to release at least four independent films in each year of the commitment period. The proposed settlement stipulates that if Paramount fails to meet this film output requirement in any year, the company will be required to divest Miramax Studios and must pay $30 million per missed film toward the health care and retirement trust funds associated with the Writers Guild of America (WGA), International Alliance of Theatrical Stage Employees (IATSE), Directors Guild of America (DGA), International Brotherhood of Teamsters (IBT), and other unions, toward the Motion Pictures & Television Fund, and to the National Association of Attorneys General (NAAG) in support of antitrust enforcement.
- Domestic Production: Paramount has agreed to bolster the merged company’s U.S. film production and spend an at least additional $1.5 billion over five years over its 2025 U.S. spending levels. Importantly, this is a baseline. Right now, around 5% of all of Paramount’s production is in the U.S. If a federal film tax credit of at least 20% is passed, production in the U.S. would need to increase to be 20% of all film production for years one and two and at least 30% of all film production for the remaining years. If, in addition to a federal tax credit, a more expansive state film tax credit is also passed in either California or New York, then production investment would need to increase to at least 40% of all film production being in the U.S instead of overseas. In addition, Paramount has committed to follow through on all existing development efforts, which includes major planned investments in New Jersey.
- Independent Film Fund: The merged company will form and operate a fund for purchasing independent films and will make an annual contribution of $5 million per year, for a total of $25 million.
- Protections for Workers: The merged company will commit $47.5 million in a workforce fund over five years for training and career development for workers who are displaced by the merger. The merged company must also honor previously established collective bargaining agreements and bargain in good faith with unions in years to come.
- Cable Agreements: For five years, the merged company must conduct negotiations for Paramount basic cable channels independently from negotiations for Warner Bros. basic cable channels, preserving the existing competitive dynamic between the companies. Preserving competition helps to keep prices down for consumers. The merged company also must continue to offer a free streaming service, like Pluto TV, and maintain its current service and quality. Additionally, the company agrees to create an editorial-independence board for CNN and CBS.
- Ongoing Monitoring: The company also agreed to appointment of an independent monitor to oversee its compliance with this agreement.
Following the announcement of the settlement with the AGs, the Writers Guild of America East and Writers Guild of America West, also announced that they have settled their lawsuit to block the proposed merger of Paramount Skydance and Warner Bros. Discovery.
“We continue to believe the merger will cause damage to writers and the industry at large," the WGA said in a statement. "Now that the Attorneys General have settled with Paramount, however, as a nonprofit, 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. Consequently, we have also settled our lawsuit with an agreement from Paramount to prohibit writer layoffs at CBS News Broadcast for 5 years, and to pay $17.5 million to our health fund along with our attorneys’ fees in the litigation."
"Though we were not successful in blocking the merger, our advocacy brought more attention to the harms that this merger—and others like it—will cause. We will continue to fight the harms of industry consolidation," the statement added.
More to come as reaction to the deal becomes available.
