AG Brown announces settlement with Paramount/Warner
A coalition of 12 state attorneys general, including Attorney General Nick Brown, announced a settlement today with Paramount Skydance Corporation and Warner Bros. Discovery resolving the states' lawsuit alleging the merger of the two entertainment giants would harm competition by lowering output and raising prices, hurting the entertainment industry, workers, and Washington consumers in the process.
Pending approval by the court, for a term of five years Paramount will be obligated by court order to increase film output, a minimum of an additional $1.5 billion commitment to bolster domestic film production, a $47.5 million fund for workers who are impacted by the merger, and restrictions on how the company handles cable negotiations to help keep prices competitive.
In July, the coalition of attorneys general sued to challenge the proposed merger of Paramount and Warner Bros. Discovery, arguing the deal was illegal, likely to lessen competition, and threatened viewers with higher prices, the decline of theatrical exhibition of films, and a reduction in the variety, quality, and amount of content distributed.
“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 free license to burden the public with anticompetitive practices and we will continue to hold them accountable.”
Today's settlement includes:
An Annual Film Release Commitment: For a term of five years, Paramount is obligated to release:
- 30 films a year — including 20 wide releases — in the first two years.
- 32 films a year — with 21 wide releases — in years three, four, and five.
- Paramount commits to release at least four independent films in each year of the commitment period.
There are significant and robust protections in the settlement to ensure that the films released are high quality and widely available to the public in theaters. For example, Paramount is obligated to release tentpole / blockbuster films annually and to make the commensurate financial investments for budget and marketing to accompany those films. Over 100 of the films released must be wide release films, meaning they will be nationally and concurrently exhibited on at least 2000 screens.
If Paramount fails to meet this film output requirement in any year, the company will be required to divest Miramax Studios and must pay $30 million per missed film toward the healthcare and retirement trust funds associated with the Writers Guild of America (WGA), International Alliance of Theatrical Stage Employees (IATSE), Directors Guild of America (DGA), International Brotherhood of Teamsters (IBT) and other unions, toward the Motion Pictures & Television Fund, and to the National Association of Attorneys General for antitrust enforcement.
Domestic Production: Paramount has agreed to bolster the merged company’s U.S. film production and spend an at least additional $1.5 billion over five years over its 2025 U.S. spending levels. Importantly, this is a baseline. Right now, around 5% of all of Paramount’s production is in the U.S. If a federal film tax credit of at least 20% is passed, production in the U.S. would need to increase to be 20% of all film production for years one and two and at least 30% of all film production for the remaining years. If, in addition to a federal tax credit, a more expansive state film tax credit is also passed in either California or New York, then production investment would need to increase to at least 40% of all film production being in the U.S instead of overseas.
Independent Film Fund: The merged company will form and operate a fund for purchasing independent films and will make an annual contribution of $5 million per year, for a total of $25 million.
Protections for Workers: The merged company will commit $47.5 million in a Workforce Fund over five years for training and career development for workers who are displaced by the merger. The merged company must also honor previously established collective bargaining agreements and bargain in good faith with unions in years to come.
Cable Agreements: For five years, the merged company must conduct negotiations for Paramount basic cable channels independently from negotiations for Warner Bros. Discovery basic cable channels, preserving the existing competitive dynamic between the companies. The merged company also agrees to effectively cap the affiliate agreements for those packages. Preserving competition and limiting the merged company’s ability to raise prices in affiliate agreements helps to keep prices down for consumers. The merged company also must continue to offer a free streaming service, like Pluto TV, and maintain its current service and quality.
Ongoing Monitoring: The company also agreed to appointment of an independent monitor to oversee its compliance with this agreement.
In securing this settlement, AG Brown joins the attorneys general of California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, and Oregon.
Read the filed consent decree here.
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