#Showbiz: Paramount wins Warner Bros takeover after settling states, union lawsuits

Paramount Skydance secured a major victory on Monday in its US$110 billion acquisition of Warner Bros Discovery, following settlements with a California-led group of US states and a Hollywood writers union. This triumph marks one of the largest media mergers in history, ensuring the concentration of power in Hollywood's film, TV, streaming, and news sectors. Paramount CEO David Ellison faced months of battles with the states to finalize a deal that would greatly expand Paramount's control in the industry.

The settlement requires Paramount to adhere to temporary film quotas and a news oversight committee, preventing the forced sale of cable assets like CNN or any lucrative film franchises. While Warner Bros shareholders were delighted by the settlement, critics argue that it will negatively impact jobs in Hollywood. Paramount's shares experienced a slight decline after the settlement, while Warner Bros Discovery shares surged over 10 percent.

The Writers Guild of America also reached a parallel settlement with Paramount, although the union believes the deal will still harm the industry. California Attorney General Rob Bonta hailed the settlement as a strong antitrust outcome, emphasizing that it promotes competition and ensures the industry remains competitive. Paramount committed to increasing domestic film production by at least US$300 million annually and adhering to US theatrical release quotas for five years.

The company will produce 30 films in the first two years and 32 films in each of the following three years, with at least four of those being independent films and 20 percent being blockbusters. Failure to meet these thresholds will result in a US$30 million payment per film, primarily allocated to worker support funds. Paramount also pledged not to raise theatre rates for three years.

Under the settlement, Paramount established a news editorial independence board to ensure the independence of CBS and CNN networks. The deal was cleared by Trump administration regulators, but a coalition of 12 state attorneys general, led by California's Bonta, had sued to block the merger, arguing that it would reduce competition and create a powerful media entity capable of raising prices in movies and television.

The Writers Guild of America also filed a lawsuit to prevent the deal, claiming it would decrease pay and worsen working conditions for film and TV writers.

Paramount and the states agreed to settle as early as the weekend, with the transaction expected to save the combined company approximately US$6 billion through cost cuts that may affect jobs across Hollywood, CNN, and CBS newsrooms. The merger is anticipated to result in US$80 billion in debt for the combined entity. The settlement alleviates a US$7 million-a-day penalty Paramount would have owed Warner shareholders for each day the deal did not complete past September 30.

Antitrust regulators in other jurisdictions, including the European Union and Britain, have already approved the deal.