Paramount makes concessions to salvage $111 billion Warner Bros. Discovery deal

Paramount's owners have made a series of concessions to a coalition of 12 Democratic state attorneys general to resolve a lawsuit that endangered the media company's $111 billion takeover bid of its larger Hollywood rival, Warner Bros. Discovery.

"The settlement is not a vote of support for this merger," said California Attorney General Rob Bonta, adding he didn't think the two companies should merge. But, he said, the settlement is a "strong solution that protects competition and consumers."

The agreement, which still must be approved by a judge, will bind Paramount to operate Warner Bros. Studios and Paramount Pictures separately — at least for now. Together, they will release at least 30 films a year for two years, and 32 movies a year for the next three, or risk a financial penalty. They will also spend $300 million more annually to make movies in the U.S.

"More production means more work here at home," Bonta said in announcing the settlement.

And the deal will also create a board intended to insulate the combined company's tv news giants, CBS and CNN, from corporate intervention in newsroom decisions, a demand from several of the attorneys general.

A trustee will monitor Paramount's compliance with the terms, Bonta said. If the company fails, he said the states intend to take it to court.

The states' lawsuit and a similar one from the Writers Guild of America were the remaining hurdles in Paramount's path to take over Warner.

"Our goal has always been to build a stronger Hollywood — one with more stories told, greater choice for consumers and stronger competition," said Paramount CEO and Chairman David Ellison. "That vision was validated by unanimous approval from competition authorities in nearly 70 jurisdictions worldwide, who agreed this deal is pro-competitive, pro-consumer and pro-worker. Having now addressed the State AGs' and WGA's concerns, we have complete clearance for this merger and look forward to putting these commitments into action."

Close ties to Trump

The Ellison family has developed close ties with President Trump.

David Ellison bought Paramount just over a year ago. He took certain steps to win the approval of Federal Communications Commission Chair Brendan Carr for that deal. He went on to hire Bari Weiss as editor in chief of CBS News. The founder of the center-right views and news site The Free Press, Weiss has argued the mainstream press is too reflexively critical of the president. She has fired several CBS veterans – others have chosen to leave – and appointed her own picks.

Both the purchase of Paramount and the deal to buy Warner rely on the fortunes of Ellison's father, Oracle co-founder Larry Ellison, a Trump financial backer and adviser. Trump arranged for him to have a controlling stake of TikTok in the U.S. when it was spun off from its Chinese owner.

Given both the state of CBS News and the Ellison's ties to Trump, the attorneys general expressed concern about how that could affect the integrity of CNN's news coverage. Trump has long accused CNN of being "fake news" and recently barred its journalists from the White House. On Monday, the network joined MS NOW and Politico in suing the administration for infringing on their First Amendment rights.

Connecticut Attorney General William Tong said in a statement that Paramount resisted the creation of an independent editorial board until last week.

"Connecticut wanted and demanded full divestiture of CNN and CBS News," he said. "We wanted to save ethical and independent journalism and news. We fought aggressively for that remedy. I am deeply disappointed that we could not do more."
The states' lawsuit and a similar one from the Writers Guild of America were the remaining hurdles in Paramount's path to take over Warner.

"Our goal has always been to build a stronger Hollywood — one with more stories told, greater choice for consumers and stronger competition," said Paramount CEO and Chairman David Ellison. "That vision was validated by unanimous approval from competition authorities in nearly 70 jurisdictions worldwide, who agreed this deal is pro-competitive, pro-consumer and pro-worker. Having now addressed the State AGs' and WGA's concerns, we have complete clearance for this merger and look forward to putting these commitments into action."

Bonta faced pressure too. Paramount let it be known it was hunting for vast new properties in Nashville, Tennessee and Austin, Texas to house its headquarters and studios. Such prominent California Democrats as Gov. Gavin Newsom, former state attorney general and U.S. Secretary of Health and Human Services Xavier Becerra — who is running to succeed Newsom — and Los Angeles Mayor Karen Bass urged a compromise to keep Paramount in Hollywood.

Additionally, Paramount asked the court to require the states put up a bond to cover the money it would have to pay Warner shareholders because the trial would imperil, or at least significantly delay, the deal. Though the judge had not yet ruled, no state wanted to have to fork over money for that privilege — especially considering Paramount had voluntarily offered that fee to Warner as a sweetener to accept the deal.