States let Hollywood’s historic merger proceed

 

The massive $110 billion merger between Paramount and Warner Bros. is back on track after California—and 11 other states that sued to block it on antitrust grounds—agreed yesterday to settle their lawsuit. So, the betrothed companies can continue planning their honeymoon.

The states’ legal challenge was the biggest obstacle to the merger after regulators in Europe and the UK approved it this summer.

Strings attached

To complete its merger, Paramount had to agree to conditions aimed at addressing potential job losses and concerns about political meddling:

  • A board composed entirely of journalists will guarantee the editorial independence of CNN and CBS News.
  • Paramount committed to paying a fine if it fails to widely distribute at least 30 movies in theaters and at least four indie films each year for the first five years. It also agreed to spend $300 million more than it did last year on US-based film production annually.
  • Paramount will remain in California and won’t sell its iconic studio lot in LA, nor the Warner Bros. lot, for at least five years. It previously threatened to move its headquarters and thousands of jobs out of the state if regulators didn’t green-light the deal before next month.

Notably, Paramount doesn’t have to divest any media assets as part of the settlement.

Epic savings

The agreement lets Paramount avoid a $7 million fee it would have owed Warner Bros. for each day the deal was delayed past Oct. 1. The companies say joining forces will help them compete with other studios in a difficult environment for the entertainment industry, helping them save $6 billion over three years (which analysts say will likely include job cuts). But the combined entity will emerge with up to $87 billion in debt, including the $54 billion Paramount borrowed to buy Warner Bros.

Wide-screen picture: The emergent corporate behemoth will own the streaming platforms HBO Max and Paramount+, CNN and CBS News, and iconic IP ranging from the Harry Potter franchise to Friends.—SK

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