Paramount consent decree: 5 tough rules bind huge $111B deal
The Paramount consent decree is now in force. U.S. District Judge Araceli Martínez-Olguín entered the order Wednesday, Sept. 30, binding Paramount’s $111 billion takeover of Warner Bros. Discovery to a list of film, cable and newsroom commitments negotiated with 12 state attorneys general and the Writers Guild of America, The Hollywood Reporter reported. The deal is expected to close Oct. 6.
Our earlier story covered the judge’s approval of the Paramount-WBD merger. This one breaks down what the decree actually requires and what happens if the combined company falls short.
What the Paramount consent decree requires
According to THR, the combined Paramount and Warner Bros. must:
- Release at least 30 theatrical films a year in each of the first two years, then at least 32 a year for the following three.
- Hit minimum counts of wide and independent releases, with at least half of all films produced or co-produced by the combined company.
- Hold a 45-day theatrical window and a 90-day subscription-streaming holdback for qualifying films.
- Negotiate basic-cable carriage deals for Paramount and Warner Bros. networks separately.
- Create a five-member independent board, chosen by Paramount, to oversee editorial standards at CBS News and CNN.
The penalties and divestiture triggers
The decree has teeth. Under the Paramount consent decree, missing the annual film quota costs $30 million per missing film, and if a shortfall goes unaddressed, Paramount’s stake in Miramax could be forced up for sale, THR reported.
Breaking the separate cable-negotiation rule could lead to an order to divest BET, VH1 and Comedy Central, among other channels. CNN and New Line Cinema are not on the table in any of those scenarios, according to THR.
The judge pointed to those backstops in her order. She called the decree “a fair, reasonable, and good faith approach to address the competitive harms alleged” and noted it imposes requirements “in the midst of a rapidly-changing marketplace,” THR reported.
Why the judge accepted the Paramount consent decree
Martínez-Olguín acknowledged the agreement stops short of a trial verdict. In a passage quoted by Deadline, she wrote that it “reflects a compromise of the claims short of full adjudication,” one that “may leave some dissatisfaction for both sides and the public” but avoids the risk and cost of a trial.
The states, led by California Attorney General Rob Bonta, sued in July over three markets: cable programming, wide-release movies and blockbuster films. They had pushed for structural remedies such as asset sales before the sides settled, Deadline reported. “Our settlement with Paramount resolves our antitrust concerns in every market we brought in our case,” Bonta said after the ruling.
The judge also turned down a temporary restraining order sought by Paramount subscribers, who had filed a separate suit claiming the deal would reduce competition in streaming, news and theatrical distribution, THR reported.
Paramount consent decree critics and what’s next
The Block the Merger coalition said allowing the deal “with no meaningful structural remedies will cost jobs, mute creativity, weaken independent journalism,” according to Deadline.
Paramount is moving quickly. It began marketing a $44 billion bond offering this week to help fund the purchase, and closing will cash out WBD shareholders at $31 a share, Deadline reported. The company also faces a ticking fee of about $7 million a day owed to WBD shareholders starting Oct. 1 until the deal closes.
Leadership is taking shape, too. Cindy Holland, chair of Paramount’s direct-to-consumer business, has already departed; her last day was Tuesday, Sept. 29, Deadline reported. Read about Ynon Kreiz’s new co-CEO role and Casey Bloys’ expected streaming role, and find more in our movie news.