Paramount Skydance Corp. has reached a settlement with California and a coalition of 12 states that were suing to block its proposed $110 billion acquisition of Warner Bros. Discovery Inc. This agreement, achieved over the weekend, paves the way for one of the largest mergers in Hollywood history. The settlement talks progressed after four states that had initially opposed the terms outlined with California ultimately conceded.
Attorney General Rob Bonta confirmed that the settlement resolves antitrust concerns by ensuring competition and protecting workers. Key provisions include a five-year commitment from the merged company to increase film output, an additional $1.5 billion investment in domestic film production, and a $47.5 million fund for workers impacted by the merger. Additionally, the settlement imposes restrictions on cable negotiations to maintain competitive pricing and requires the company to continue offering a free streaming service like Pluto TV.
The film output commitment mandates 30 films annually (20 wide releases) for the first two years, and 32 films annually (21 wide releases) for the subsequent three years, with at least four independent films each year. Failure to meet these targets would result in a $30 million penalty per missed film, directed towards healthcare and retirement trust funds of various Hollywood unions and the National Association of Attorneys General. The merged company will also form a $25 million independent film fund over five years, contributing $5 million annually.
The settlement also addresses concerns regarding U.S. film production, requiring Paramount to increase its domestic spending by at least $1.5 billion over five years beyond its 2025 levels. Specific production percentages for the U.S. are tied to the passage of federal and state film tax credits, potentially reaching 40% of all film production if both federal and expanded state tax credits are implemented. Furthermore, the agreement ensures the merged entity honors collective bargaining agreements and establishes a News Editorial Independence Board for CNN and CBS.
The announcement led to a significant surge in stock prices for both companies, with Warner Bros. Discovery and Paramount Skydance shares rising over 10%. This swift resolution was crucial for Paramount, which faced a "ticking fee" of $0.25 per share per quarter, amounting to over $600 million every three months, payable to Warner Bros. Discovery shareholders if the deal didn't close by September 30.
