Paramount and Warner Bros. Discovery may move forward with a merger under the conditions that they boost film production, support displaced workers and preserve competition among cable channels over the next five years, 12 Democratic-led states and the attorneys representing the companies agreed in a court settlement Monday.
After the two leading film companies sought a $110 billion merger this summer, California Attorney General Rob Bonta, Oregon Attorney General Rayfield and 10 other attorneys general filed a lawsuit in the U.S. District for the Northern District of California arguing the merger eliminates competition within the film industry and violates federal antitrust laws.
If approved by a judge, the settlement would allow the merger to move forward under the conditions that over the next five years the merged company spends at least $1.5 billion to boost U.S. film production and commits $47.5 million to a training and development fund for workers affected by the merger.
The deal also requires Paramount to negotiate its basic cable channels separately from Warner Bros.’ basic cable channels to preserve competition between them and keep prices down for consumers. The company must also establish a News Editorial Independence Board to help protect editorial independence at CNN and CBS.
The settlement requires the merged company to commit to releasing 30 films per year in theaters for the first two years of the combined company and 32 films per year for the three years after that. Additionally, the company must release at least four independent films each year throughout the five years of the settlement.
“We stepped up to challenge this merger to limit rising costs for working families, to preserve competition, and to protect Oregon’s film production industry,” said Oregon Attorney General Rayfield. “Today’s agreement keeps real competition in place, ensures that productions will continue and ensures journalistic independence. That’s a win for Oregon workers and consumers.”
If the company fails to meet the film output requirements, it must divest from Miramax Studios and pay $30 million per missed film toward healthcare and retirement benefits for the Writers Guild of America, the International Alliance of Theatrical State Employees, the Directors Guild of America, International Brotherhood of Teamsters and other unions.
“This settlement is not a vote of support for this merger,” Bonta said in a statement. “But we believe this settlement, which resolves our antitrust concerns in every market alleged in our case, protects competition and consumer choice, and puts workers’ needs, concerns and futures first, is the best course of action.”
Bonta filed the lawsuit alongside the Democratic attorneys general of Oregon, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York and Washington.
