A major breakthrough came on Monday (September 21) in the acquisition of Warner Bros. Discovery by U.S. media giant Paramount Skydance. Paramount has reached a settlement with 12 states, including California and New York, agreeing to make a series of commitments in exchange for the states withdrawing their antitrust lawsuit, clearing a major obstacle for the US$110 billion merger.
According to CNN, California Attorney General Rob Bonta, who led the 12-state coalition, announced the settlement in Los Angeles on the 21st. The 12 states filed the lawsuit on July 13 this year, arguing that a merger of the two companies could “stifle competition,” reducing competition in the film and television markets and potentially affecting consumer choice.
On July 20, a federal judge in California even ordered the two companies to pause the merger. Paramount, however, argued that the deal is not anticompetitive and would instead help Hollywood studios remain competitive in a media industry where tech companies’ influence is growing.
Under the settlement arrangement, Paramount has committed to releasing 30 films in theaters each year after the merger, half of which will be produced by the new company itself; for each film short of that target, it could face a US$30 million fine, and it may also involve divesting its stake in Miramax. In addition, Paramount has pledged not to sell or shut down the major studio lot in Los Angeles, and to invest US$1.5 billion in producing film and television content.
Paramount and Warner Bros. Discovery previously estimated that the merger would save about US$6 billion a year in costs, but the new company is also expected to carry roughly US$80 billion in debt. The settlement also allows Paramount to avoid another massive expense: according to deal terms, if the acquisition is not completed by September 30, Paramount would have to pay Warner Bros. Discovery shareholders a US$7 million “ticking fee” for each day of delay thereafter.
Other major market regulators, including those in the European Union and the United Kingdom, have already approved the deal. CNN, citing sources, reported that the two companies currently expect the transaction to be completed in early October; another report noted that Paramount had originally expected the deal to close by the end of September.
