US judge clears Paramount takeover of Warner Bros. Discovery

A U.S. federal judge on Sept. 30 approved a settlement between Paramount, Warner Bros. Discovery and 12 states, allowing Paramount, led by David Ellison, to proceed with the takeover in the United States. Paramount has tentatively designated Oct. 6 as the closing date, Variety reported.¹²³

A five-year settlement

U.S. District Judge Araceli Martínez-Olguín approved the consent decree resolving the states’ attempt to block the merger. The coalition had dropped its lawsuit in favour of the settlement on Sept. 21. France 24 reported that the concessions will remain binding for five years and can be enforced by the court; Variety said the approval represented the last outstanding barrier to the transaction.¹²³

The decree does not require structural measures such as divestitures at the outset, according to Variety. It instead sets operating conditions and includes provisions that could require divestiture if the combined business fails to comply. Variety also reported that the Paramount Studios and Warner Bros. lots in California cannot be sold for at least five years.³

The combined studio must make at least $300 million in additional annual investment in U.S. film production, Variety reported. According to France 24, the company is required to put out 30 theatrical releases annually during its first two years, followed by 32 annually over the next three years. Variety reported that broadly released films will have a 45-day theatrical window.²³

The agreement also requires separate negotiations with cable providers for channels owned by Paramount and Warner Bros. It establishes a five-member panel intended to protect the editorial independence of CNN and CBS News, although Ellison controls appointments to that panel, according to Al Jazeera.¹

A large media combination

Paramount prevailed over Netflix in a February contest for the Warner Bros. Discovery assets, according to France 24 and Al Jazeera. The Trump administration approved the transaction in June without requiring changes to the business. Variety reported that authorities in 68 jurisdictions, including the U.S. Justice Department, had cleared the merger.¹²³

Variety valued the transaction at $111 billion, while Al Jazeera described it as a $110 billion acquisition. Variety said the combined company would encompass two large film studios, HBO Max, Paramount+ and several television operations. France 24 reported that sovereign wealth funds from Saudi Arabia, Qatar and Abu Dhabi are providing roughly $24 billion in equity, while Larry Ellison contributed major financing and guaranteed the lenders.¹²³

Ellison has appointed Ynon Kreiz as co-chief executive of the combined company, France 24 reported. Kreiz, who has led Mattel, is due to join Paramount and take a board seat on Oct. 5. Variety reported that Casey Bloys, the head of Warner Bros. Discovery’s HBO, is positioned to oversee the combined streaming operation after Cindy Holland announced her departure from Paramount’s direct-to-consumer business.²³

Warner Bros. Discovery chief executive David Zaslav is expected to leave when the transaction closes, according to Variety. Variety reported that his potential package exceeds $550 million, combining shares and cash and including $34.2 million in severance pay. Warner Bros. Discovery executives Bruce Campbell and Gunnar Wiedenfels are also anticipated to leave, Variety reported.³

Concerns over jobs and editorial control

The states estimated that the combination would place nearly one-third of theatrical releases and basic cable programming under one company, Al Jazeera reported. Opponents warned of job reductions and lower annual film output, while news organisations raised concerns about CNN’s independence, according to France 24. The decree’s production obligations and editorial panel are intended to address some of those issues.¹²

Actor Mark Ruffalo, who had urged California Attorney General Rob Bonta and 11 other state attorneys general not to settle, criticised the approval. He said 5,670 filmmakers had opposed the transaction and that more than 75,000 people had signed against conceding the deal during a three-week period. Variety reported that he said the campaign against the merger would continue.³