A California-led coalition of 12 states and Hollywood entities reached an agreement on Monday, September 22, removing a key obstacle to the $110 billion Paramount and Warner Bros. merger. The settlement, which still awaits judge approval, includes commitments to increase film production and the creation of a fund for workers affected by the merger.
As part of the settlement, Paramount agreed to release at least 30 movies in theaters during the first two years and 32 in the following three years. The company must also release at least four independent films each year over that five-year period.
If Paramount fails to meet these production targets, the company faces penalties of $30 million per missing movie and may be required to sell its stake in Miramax Studios if the error is not corrected within six months. David Ellison previously stated a plan to release at least 30 films in theaters each year while maintaining a theatrical window of at least 45 days.
The agreement also prohibits the bundling of Paramount’s cable channels, such as MTV, Nickelodeon, BET, and Comedy Central, with Warner Bros. Discovery networks like TNT, TBS, Food Network, and Discovery. This measure aims to prevent rising cable and streaming package prices. Additionally, the merged company must continue to offer a free streaming service, such as Pluto TV, that maintains existing quality and service.
Paramount is also required to spend an additional $1.5 billion on domestic film production over the next five years, or $300 million more per year. Furthermore, the company must establish a $25 million fund for independent filmmaking, contributing $5 million annually.
The merger would bring Paramount Pictures, Warner Bros., CBS News, CNN, Paramount+, and HBO Max under a single corporate umbrella. This consolidation would result in four major film distributors controlling more than 85% of U.S. wide-release theatrical films and two companies controlling 59% of basic cable.
California Attorney General Rob Bonta, who led the legal challenge, stated that while the settlement resolves antitrust concerns and protects competition and consumer choice, it is not a vote of support for the merger. Bonta noted that the settlement protects workers and jobs in Hollywood.
The settlement remains subject to approval by a judge.
