A multistate coalition led in part by Washington Attorney General Nick Brown has reached a settlement with Paramount Skydance Corporation and Warner Bros. Disco
A multistate coalition led in part by Washington Attorney General Nick Brown has reached a settlement with Paramount Skydance Corporation and Warner Bros. Discovery aimed at easing concerns that the companies’ proposed merger would reduce competition and drive up costs for consumers.
The coalition of 12 state attorneys general announced the settlement today, saying it resolves the states’ lawsuit alleging the merger of the two entertainment companies would harm competition by lowering output and raising prices, hurting the entertainment industry, workers and Washington consumers. The agreement is pending court approval and would last five years.
“While federal regulators ignored the clear impacts to consumers and labor posed by this mega-merger, states came together and secured significant concessions from this media behemoth,” Brown said. “No company has a free license to burden the public with anticompetitive practices, and we will continue to hold them accountable.”
Under the proposed court order, Paramount would be required to increase film output and make additional investments in domestic production, while also setting aside money for workers affected by the merger and limiting how the merged company negotiates certain cable agreements.
The settlement includes an annual film release commitment requiring Paramount to release 30 films a year, including 20 wide releases, in the first two years. In years three through five, Paramount would be required to release 32 films a year, including 21 wide releases. Paramount also commits to release at least four independent films each year during the five-year period.
The agreement includes provisions intended to ensure films are “high quality and widely available to the public in theaters,” including a requirement to release tentpole or blockbuster films annually and to make corresponding investments in budgets and marketing. More than 100 of the films released under the agreement must be wide releases, defined as being nationally and concurrently exhibited on at least 2,000 screens.
If Paramount fails to meet the film output requirement in any year, the settlement says the company would be required to divest Miramax Studios and pay $30 million per missed film. Those payments would go toward healthcare and retirement trust funds associated with the Writers Guild of America, International Alliance of Theatrical Stage Employees, Directors Guild of America, International Brotherhood of Teamsters and other unions, as well as the Motion Pictures & Television Fund and the National Association of Attorneys General for antitrust enforcement.
On domestic production, the settlement says Paramount has agreed to bolster U.S. film production and spend at least an additional $1.5 billion over five years above its 2025 U.S. spending levels. The agreement describes that amount as a baseline and notes that “right now, around 5% of all of Paramount’s production is in the U.S.”
The settlement also ties additional production requirements to potential tax policy changes. If a federal film tax credit of at least 20% is passed, the agreement says U.S. production would need to increase to 20% of all film production for years one and two and at least 30% for the remaining years. If, in addition to a federal tax credit, a more expansive state film tax credit is passed in either California or New York, the settlement says production investment would need to increase to at least 40% of all film production being in the U.S.
The agreement also calls for an independent film fund. The merged company would form and operate a fund for purchasing independent films and contribute $5 million per year, totaling $25 million over five years.
For workers, the settlement requires the merged company to commit $47.5 million over five years to a workforce fund for training and career development for workers displaced by the merger. The agreement also requires the company to honor existing collective bargaining agreements and bargain in good faith with unions in the future.
The settlement includes restrictions on cable negotiations intended to preserve competition and limit price increases. For five years, the merged company would be required to negotiate affiliate agreements for Paramount basic cable channels independently from negotiations for Warner Bros. Discovery basic cable channels. The agreement also says the merged company will effectively cap affiliate agreements for those packages. In addition, the company must continue to offer a free streaming service “like Pluto TV” and maintain its current service and quality.
The settlement also includes ongoing monitoring, with the company agreeing to the appointment of an independent monitor to oversee compliance.
Brown joined the attorneys general of California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York and Oregon in securing the settlement.
The coalition sued in July to challenge the proposed merger, arguing it was illegal, likely to lessen competition, and threatened viewers with higher prices, a decline in theatrical exhibition of films, and a reduction in the variety, quality and amount of content distributed. Pending court approval, the settlement would resolve that lawsuit.
