Paramount to settle lawsuits, paving way for Warner Bros. takeover

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomeNewsRetail & MarketingParamount to settle lawsuits, paving way for Warner Bros. takeoverThe studio has promised merger synergies of US$6 billion, an amount almost certain to result in job eliminationsAuthor of the article:Erik Larson and Christopher PalmeriThe terms are said to include a financial penalty if Paramount fails to make good on a promise to distribute 30 films per year in theatres. Photo by Ethan Swope/BloombergParamount Skydance Corp. has reached a settlement with California and other states suing to block its proposed acquisition of Warner Bros. Discovery Inc., according to a person familiar with the matter.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountSettlement talks came to fruition over the weekend after four states that had opposed terms of a deal outlined with California conceded, said the person, who asked not to be named discussing confidential negotiations. The settlement, which is expected to be announced later today, paves the way for one of the largest mergers in Hollywood history.Lawyers for the states worked all night on the agreement, the person said. Four states — Massachusetts, New York, Connecticut and Minnesota — had been holdouts on a possible settlement, but ultimately concluded the expense of the legal battle was not justifiable without California at the helm, the person said.Breaking business news, incisive views, must-reads and market signals. Weekdays by 9 a.m.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Posthaste will soon be in your inbox.We encountered an issue signing you up. Please try againThe states that held out longer did succeed over the past week in securing an independent editorial board for CBS and CNN as part of the deal, the person said. Strengthening the board’s independence was part of the reason the holdout states ultimately agreed to the deal, the person said. The board will be composed only of journalists, with no executives or shareholders allowed to join, the person said, adding that the board will be required to have political balance.Paramount shares climbed seven per cent to US$10.91 in New York trading after rising as much as 13 per cent. Warner Bros. shares were up 10 per cent to US$30.62 after rising as much as 11 per cent.The terms are said to include a financial penalty if the company fails to make good on a promise to distribute 30 films per year in theatres.Discussions included Paramount having to pay US$30 million for each film that falls short of that goal, Bloomberg reported. It could also be forced to sell its stake in Miramax, the studio behind movies such as Pulp Fiction, if it fails to meet the target.Representatives for Paramount, California, New York, Minnesota and Massachusetts didn’t immediately respond to requests for comment.If the final terms are approved, the agreement would spare Paramount from having to pay late fees to Warner Bros. of US$7 million a day, which were to begin on Oct. 1.Paramount, the parent company of CBS, MTV and other media businesses, announced in February that it was buying Warner Bros. after outbidding rival Netflix Inc. The US$110 billion deal will combine two of Hollywood’s most storied movie studios, two major subscription streaming services and two of the largest owners of cable-TV channels.Although regulators in nearly 70 jurisdictions blessed the acquisition, 12 state attorneys general and the Writers Guild trade union sued to the block the merger, saying it would stifle competition for film and cable-TV distribution, raise prices for consumers and in the writers’ case, lower their wages. A trial date was set for March.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.Paramount had made offers in recent weeks to try and settle the suits, including promises to release 30 films a year in theatres and increase the production of TV shows.California Attorney General Rob Bonta, who led the litigation brought by the states, had said he prefers structural changes, such as a sale of assets, rather than behavioural remedies that are hard to enforce.California’s top law enforcer told Bloomberg TV on Sept. 17 that a sale of some intellectual property “could be a component” of a settlement. The deal would bring well-known Warner Bros. movie franchises such as DC Comics, Harry Potter and The Lord of the Rings into the Paramount fold.A settlement would resolve a serious financial threat to Paramount as well. A failed deal would have forced Paramount to pay US$7 billion to Warner Bros.Paramount chief executive David Ellison did little to squash news reports that the company was looking to move its film operations from California to another presumably more hospitable state, like Georgia or Texas.Bonta found himself increasingly isolated in recent weeks with many of the state’s Democratic party establishment calling for a settlement. Those voices included Governor Gavin Newsom, Democratic gubernatorial candidate Xavier Becerra and Los Angeles Mayor Karen Bass.The Ellisons plan to finance the acquisition with some US$47 billion in new equity, much of it coming from three Middle Eastern sovereign wealth funds and additional borrowings.Paramount has promised merger synergies of US$6 billion, an amount almost certain to result in job eliminations. An August report prepared for Los Angeles County cited a potential loss 15,567 corporate roles that overlap at both companies.We apologize, but this video has failed to load.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.