Judge Approves Paramount-Warner Bros. Merger Settlement

Judge Araceli Martinez-Olguin has signed off on Paramount’s legal settlement with 12 state attorneys general, clearing the final hurdle for its $110 billion merger with Warner Bros. Discovery. “[T]he Court finds the proposed consent decree represents a reasonable factual and legal resolution of the dispute,” Olguin wrote in her order on Wednesday. Under the terms of the settlement, Paramount has agreed to a minimum investment of $300 million per year for five years in U.S. film and TV production, amounting to a total of $1.5 billion. The company will also release at least 30 films per year theatrically in the first two years of the deal and 32 films per year in the three years after that. At least four films per year must be independent films and at least 20% must be blockbusters, although the consent decree defines independent films as movies “based on an original screenplay” or simply co-produced by Paramount. If Congress passes a federal film tax credit, Paramount agreed that 20% of all film production must be in the U.S. for the first two years of the merger and 30% of the next three. Paramount will also be held to its prior commitment to have a theatrical window of 45 days and hold its films back from streaming availability for 90 days. On the TV side, Paramount agreed to negotiate distribution for its suite of cable networks and Warner Bros. cable portfolio separately, unless a distributor requests otherwise in writing. It also agreed to establish an independent oversight board at CNN and CBS News and will continue to operate free, ad-supported streaming platform Pluto TV. Additionally, the companies will maintain their respective studio lots, honor collective bargaining agreements with Hollywood’s unions and make community investments. Those investments include a $5 million-per-year contribution to an independent films fund and $9.5 million annually for film and TV career training and development programs to benefit qualified educational institutions and community arts organizations. Failure to comply with the various commitments in the settlement range from a $30 million penalty per film that misses the theatrical goal to forced divestitures of the company’s 49% Miramax stake within a 12-month period as well as BET, Comedy Central, VH1, Smithsonian, Destination America and Science Channel within a 120-day period. Paramount CEO David Ellison has previously said the merger is expected to close two weeks after reaching the settlement, or in early October. More to come…