UPDATED with CA AG statement, Block The Merger response: A federal judge has approved the Sept. 21 settlement between Paramount and a group of state Attorneys General that sued to block its merger with Warner Bros. Discovery, removing the last hurdle for the deal to close.
“The Court finds the proposed consent decree represents a reasonable factual and legal resolution of the dispute,” wrote U.S. District Judge Araceli Martínez-Olguín today in her long awaited sign-off. “The parties’ proposed consent decree falls within the scope of the case made by the pleadings.”
Addressing critics of the September 21-unveiled settlement between the blue state AGs and ParaBros, the judge bluntly says: “The Court recognizes that this proposed consent decree reflects a compromise of the claims short of full adjudication – compromise that may leave some dissatisfaction for both sides and the public but a compromise that saves the risk, time, and expense of litigating through trial.”
Martínez-Olguín did not greenlight the settlement immediately, but allowed more than a week for opposition briefs to be filed, setting a Sept. 28 noon PT deadline for Paramount and the AGs to respond. It’s been a bit of a nail-biter as both sides awaited her final sign-off. Read her full order here.
Paramount CEO David Ellison said last week it would take about two weeks to formally combine the companies. That would bring it into next week. The faster the better for Paramount since it starts to rack up a so-called ticking fee to WBD shareholders of about $7 million a day starting Oct. 1 if the deal is not closed.
Twelve AGs led by Rob Bonta of California had been moving the antitrust trust case forward with a trial date set for March before the sides came together rather suddenly over the course of a few days. Bonta presented the agreement at a press conference with little enthusiasm, outlining the proposed remedies while insisting the agreement “is not a blessing” of the mega-deal and he still doesn’t think two of Hollywood’s biggest players should merge.
Today the much-criticised Bonta said, “We are pleased the court has approved our settlement. Our settlement with Paramount resolves our antitrust concerns in every market we brought in our case, protects competition and consumer choice, and centers the needs, concerns, and futures of California workers.”
Having failed in its 11th-hour attempt at slow-walking Judge Martínez-Olguín’s approval of the settlement, Block the Merger Wednesday said, “In years to come, we’ll be able to point to this failure to put consumers over the monied interests of corporate consolidation as the tipping-point moment for media in this country. Allowing the Paramount Skydance-Warner Bros. Discovery merger to move forward with no meaningful structural remedies will cost jobs, mute creativity, weaken independent journalism, and damage our First Amendment rights. The ripples of this merger will be far-reaching, long-lasting, and impossible to contain.”
It’s been a long road. Paramount announced the deal in February after a string of hostile offers that WBD rejected. Adding sweeteners, Ellison eventually convinced the Warner board to agree to a combination, derailing a WBD-Netflix deal. It began moving briskly towards close until the AGs sued in July and the judge allowed the case to proceed. Paramount agreed to not close the deal while the suit was pending.
Attempted settlement talks stalled as Bonta and the AGs sought structural remedies like asset sales to address alleged antitrust violations in three markets: cable programming, wide-release movies and blockbuster films, the crux of the suit. Ellison demurred, but the sides ultimately came together and discussions accelerated.
There’s been significant opposition to the deal from the start, but also tremendous pressure on Bonta to put the case to rest as Ellison threatened to move the studio out of California.
In anticipation of the close, Paramount started marketing a $44 billion bond offering this week. Proceeds of the debt sale will fund the $110 billion acquisition, along with equity financing. With the coast now clear, the company will move quickly to close the complex transaction that will see it cash out WBD stockholders for $31 a share.
In the first major shakeup of the new regime, Cindy Holland, chair of Paramount’s Direct-to-Consumer business, has departed. Her last day was Tuesday, she said in a company memo. That leaves Casey Bloys, chairman-CEO of HBO and HBO Max Content, as the presumed streaming head of the combined Paramount-WBD.
A second shoe dropped this morning when Mattel chairman-CEO Ynon Kreiz stepped down rather abruptly. Shortly after Martínez-Olguín approved the settlement, Paramount announced Kreiz had been named co-CEO with Ellison.
The settlement includes a number of legally enforceable commitments by Paramount over five years following the close, like a set number of theatrical releases, an editorial oversight board for CNN and CBS, and negotiating separately with distributors for Paramount and WBD cable networks. There are some loopholes and there were no structural remedies. Read the settlement document here.
Continuing to address critics of the settlement who filed amicus briefs and wrote letters to the court, the judge noted their “dismay at many of the proposed consent decree’s provisions. However, a proposed consent decree like this one represents a negotiated settlement that does not fully remediate an alleged violation or even necessarily resolve the ultimate factual and legal issues of a case.”
She said “these hopes and desires for the proposed consent decree to reach farther – to achieve more – do not rise to the level of legal violations upon which the Court can reject the parties’ negotiated resolution.”
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