It looks like Warner Bros. Discovery will soon belong to Paramount and David Ellison after all. The entertainment giant, intent on eating everything in front of it to grow itself like a game of “Snake,” reached an agreement on Monday with the slate of states, led by California, that planned to bring an antitrust challenge to its planned acquisition of WB, according to the New York Times. With that out of the way, there is unlikely to be any other regulatory challenges to the move that will shrink Hollywood to just four major studios.
Per the report, Paramount’s concessions will include establishing a board of journalists to maintain the independence of news organizations, including CNN and CBS News, which will soon both sit under the Paramount umbrella. The company also agreed to spend $1.5 billion on film production over the next five years and committed to distributing 30 movies in theaters every year.
While getting Paramount to surrender a hefty chunk of cash and commit to the theatrical experience, the devil will be in the details—which have not yet been made public. Some are already ringing alarm bells about potential gaps in the framework, including former Federal Trade Commissioner Alvaro Bedoya. On Twitter, the former regulator warned that a commitment to distribute 30 films a year doesn’t mean they’ll make 30 films per year. Re-releases and acquisitions would count toward that total, which means there is no guarantee that new movies are getting made under the Paramount label.
Bloomberg reported that if Paramount fails to meet its 30-film-per-year pledge, it’ll have to pay a penalty of $30 million per film that it falls short. But Bedoya points out that money is a fine, which means it’s not going to support the film industry. “Who will they pay? The crews they would have hired? The theater owners with empty seats? No. It will be some fund that a government official has to then distribute,” he wrote. “Rent is due on the 1st of the month, not two years from now.”
The company Paramount is about to purchase, Warner Bros. Discovery, notably killed Coyote vs. Acme just a few years ago despite the film being finished and ready to distribute in order to claim a tax write-off and avoid having to spend on marketing. So it’s not like this new combined company is going to be above just paying the fine if it doesn’t feel like putting out a film.
It’s hard not to read the settlement as the state Attorneys General, particularly California’s Rob Bonta, acting scared. In recent days, Paramount threatened to flee Hollywood and move to Nashville, which seems to have accelerated the urgency for the settlement.
Given that Paramount agreed to pay Warner Bros. shareholders $7 million per day for every day beyond October 1 that the deal doesn’t close, it sure feels like the states could have squeezed some more favorable terms out of the negotiations. Five days’ worth of fines would have been equal to the end-of-year penalty for failing to distribute a film, so why give up the biggest threat you have to get less leverage and middling acquiescence?
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