Warner Bros. Merger Back On: Paramount Settles Antitrust Suit

Paramount reached a settlement on Monday resolving the antitrust lawsuit that delayed its acquisition of Warner Bros. Discovery, as reported earlier by The New York Times. If approved by the courts, this would remove the last major obstacle to the proposed $111 billion merger, creating one of the world’s largest media companies. The deal includes oversight to ensure the editorial independence of news organizations and a commitment to protections for film production and cable pricing, but no requirement for Paramount to relinquish control of its primary networks or film studios.

In July, a group of 12 state attorneys general — led by California Attorney General Rob Bonta — sued Paramount, arguing the merger would concentrate too much control over news networks, cable TV and the movie industry. The suit followed a year-long bidding battle for Warner Bros. Discovery, leaving Paramount CEO David Ellison as the top bidder after Netflix dropped out.

What was agreed to, and what was not

Under the consent decree — an agreed-upon list of compromises resolving the lawsuit pending court approval — Paramount agreed to establish an oversight board of journalists to protect the editorial independence of news organizations CNN and CBS News. 

It has also agreed to distribute 30 movies in theaters annually, with more of those movies being made domestically, and to spend an additional $1.5 billion on film production over the next five years. If it misses those production and distribution commitments, the company will have to sell off those parts of the business. Additionally, the merged entity will retain both companies’ historical studio lots, guarantee continued California movie and TV production and fund the acquisition of independent films.

Concessions have also been made that ensure the companies’ cable channel bundles continue to be sold separately to distributors, a move intended to help keep prices down and protect against monopolistic practices by a conglomerate that will control about 27% of cable and satellite channel distribution if the deal goes through.

The agreement avoids concessions that would require Paramount to restructure the combined company, keeping CNN and both movie studios intact. 

Under the settlement, Paramount agrees to release 30 movies (such as WBD’s A Minecraft Movie, pictured here) to theaters annually and to spend an additional $1.5 billion on film production over the next five years.Warner Bros. Pictures

What happens next?

The Writers Guild of America East and Writers Guild of America West, jointly the WGA, had filed a separate lawsuit seeking a pause in the Paramount-Warner Bros. Discovery merger, alleging that it was illegal and harmed writers, and that the union would “continue the fight to block it.” With the states backing out of the battle and citing an inability to sustain legal costs on its own, the WGA announced that it has resolved its companion lawsuit. CNET has reached out to representatives for comment.

Bonta, who alleged in July that the proposed merger would “lead to higher prices, lower quality and less content” for consumers, cable distributors and movie theaters in the US, framed the settlement as a resolution of the lawsuit, not an endorsement of the merger by the plaintiff states.

“Broadly speaking, we believe further consolidation of markets that are central to American economic life doesn’t serve the American economy,” Bonta said in a statement.

Meanwhile, Paramount CEO Ellison intends to close the deal in about two weeks, per a staff letter obtained by The New York Times, though that timeline is unconfirmed. Paramount has reportedly agreed to pay Warner Bros. Discovery shareholders $7 million per day if the deal doesn’t close by Oct. 1, which is a lot, but less expensive than a prolonged trial.

Paramount didn’t immediately respond to a request for comment.

Antuan Goodwin

Senior Writer, Electrified Cars

Antuan has nearly 20 years of expertise and experience testing hundreds of cars, including electric, hybrid, plug-in hybrid, hydrogen, and traditional combustion vehicles. See full bio