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Paramount settles suit, paving way for Warner Bros. merger
Several outlets are reporting the Paramount has reached a settlement with California and other states who sued to block the blockbuster merger.
Skydance-owned Paramount reached a settlement Monday with a group of state attorneys general that had sued to challenge the company’s buyout of Warner Bros. Discovery, effectively paving the way for the mega merger to move forward.
The backstory:
The $81 billion merger would combine two of Hollywood’s biggest studios into a single powerhouse.
In July, California was among the states who filed a lawsuit attempting to block the merger.
The lawsuit claimed the merger violates Section 7 of the Clayton Act, which makes mergers illegal if they lessen competition or try to create a monopoly. If the studios do not agree to pause the deal until the lawsuit is settled, the states plan to file a temporary restraining order to stop it.
The states that joined California in the lawsuit are Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.
According to California Attorney General Rob Bonta, Paramount agreed as part of the settlement to produce 30 movies in each of the first two years of the deal, then 32 in the ensuing three years. The deal will also require the film to invest $300 million per year for five years to increase domestic production of films, noting that the company currently produces only 5% of its movies in the United States. That investment will add up to $1.5 billion over five years, he said.
He also said that if Congress passes a federal film tax credit, Paramount will have to increase its domestic film production from 5% to 20% for two years, then to 30% for the next three years. If California or New York approves an "uncapped" state film tax incentive, Paramount will have to increase domestic production to at least 40%.
What they're saying:
Paramount CEO David Ellison said in a statement he was grateful to Bonta and other parties to the litigation for reaching "a resolution that serves all parties."
"Our shared aim was an outcome that best serves consumers, workers and -- most importantly -- the creative community so vital to the art of visual storytelling," Ellison said. "We're confident this agreement does exactly that, memorializing a series of commitments that include 30+ films annually and expanded U.S. film production to help revitalize our industry here at home.
"Our goal has always been to build a stronger Hollywood -- one with more stories told, greater choice for consumers and stronger competition," he said. "... Having now addressed the state AGs' and (Writers Guild of America's) concerns, we have complete clearance for this merger and look forward to putting these commitments into action. Bringing Paramount and Warner Bros. Discovery together, will build that stronger Hollywood, creating expanded opportunity for our people and even more great entertainment for audiences around the world."
What we don't know:
It's unknown when the proposed merger will officially go into effect.
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The Source: The Associated Press and City News Service contributed to this report. This story was also written with information from previous FOX 11 reports.