Paramount settles with states, clearing way for Warner Bros. merger

Comes after California AG reverses course; WGA also settles

In an unexpected development, the twelve states attorney generals who were suing to stop the merger between Paramount and Warner Bros. Discovery, have come to a settlement, requiring concessions that don’t really amount to much.

California AG Rob Bonta’s momentum to take the case to trial evaporated quickly as California Governor Gavin Newsom and Los Angeles Mayor Karen Bass abandoned the effort, and the merger was approved by every international territory, and the Justice Department months earlier. The feeling was the case would cost taxpayers a lot of money- especially if the twelve states were required to post a $1.8 billion bond to cover the $7 million “ticking fee” Paramount would have to pay per day to Warner if the deal wasn’t closed by the end of the month. Paramount also threatened to move out of the Los Angeles area to a more business-friendly climate (such as Texas, Georgia, or Tennessee) if the lawsuit continued to proceed. Also, Iowa’s and Montana’s support of the merger – which are red states with Republican AGs – also helped derail the blue states’ case as they asked the U.S. Supreme Court to step in to approve it, with the high court asking Bonta and the other states to respond by September 25. 

Neither Illinois or Indiana were part of the lawsuit trying to stop the Paramount-Warner merger.

Paramount can close the deal within the next two weeks, as the company will now own one of the biggest television and film libraries on Earth, with ownership of two studio lots, CBS and its owned stations including CBS Chicago, 25 percent of The CW, streamers Paramount + and HBO Max, and more than fifty cable channels. Paramount owner David Ellison used a hostile takeover to beat Netflix in their pursuit of Warner Bros. last February and succeeded, stunning everybody in the industry. 

There are those aforementioned concessions in the settlement:

– Paramount agrees to increase domestic (in the U.S.) production by $300 million annually, and agreed to keep the Paramount and Warner Bros. lots separate in Los Angeles – at least for now. 

– The studio agreed to release 30 films in theaters for the first two years and 32 in the following three years. Four films must be indie productions and Paramount has to establish a fund to buy these them. Paramount would face a financial penalty if they didn’t meet the quotas, including divesting production company Miramax. 

– Paramount and Warner Bros.’ networks are required to negotiate retransmission deals with cable, satellite, and virtual providers separately. For example, Paramount can negotiate for Nickelodeon, VH1, and BET, but not Cartoon Network, TBS, and TNT at the same time. Failure to do so would mean the company would be forced to divest several cable channels. This move prevents Paramount from having too much leverage in negotiations. 

– Paramount must also invest $9.5 million a year for workforce training and career development in film and TV production, film programs, and community arts organizations. 

– An independent board must be established for oversight of both CBS News and CNN to ensure editorial independence. 

– Maintain a free ad-supported streaming service, referring to Pluto TV.

Bonta will be watching. 

“Together, we’ll select a trustee to monitor’s Paramount’s compliance with these terms”, he said. “And if they ever fail to comply with the many critical terms we have in our settlement, we can go to court.”

Despite agreeing to settle, Bonta was still against the merger, but basically conceded defeat. So did the Writers’ Guild of America, who received a promise of no layoffs of any CBS News employees and will receive $17.5 million toward the guild’s health fund in their settlement. Both parties realized a long trial – set to begin in March 2027 – would be too costly, and moreover if a jury found in in favor of the states and the WGA, Paramount would appeal to the U.S. Supreme Court – something Ellison said he would do. And with a 6-3 conservative majority, as the Court has historically ruled in favor of big business, the chances both the states and the WGA winning would have been slim. 

The settlement also gives the Trump administration a major victory; the President was in favor of the merger, given Ellison and his father Larry have strong ties to him, as he wants to remake CBS and CNN into another Fox News-type outlet. Now they have that chance, despite the “independent board” devised in the settlement – which is basically, a sham. 

This move is very disappointing as we’ve seen over the last few decades what media consolidation has done to media, with fewer choices of programming, and numerous job layoffs – which have become a regular occurrence in radio now with the latest example of WSSR-FM morning personality Eddie Volkman being dropped for a nationally syndicated show. A trial would have been worth it, fighting against these big corporate monoliths and these billionaires who have ruined this business with their inept decision making. Instead, Democrats Bonta, Newsom, Bass, and the state AGs ran away with their tails between their legs, being the true cowards they are.