Paramount antitrust settlement: What it means for Warner deal and Atlanta

California, New York and 10 other states filed suit in July, alleging the combined company would control nearly one-third of theatrical motion pictures and nearly one-third of basic cable programming, potentially harming competition across the entertainment industry. The Writers Guild of America also sued. Georgia, which remains a key nerve center for the Turner networks under Warner Bros., was not involved in the suit.

In his statement, Ellison thanked Bonta, the other involved attorneys general and the WGA for “engaging in good faith to find a path forward to a resolution that serves all parties.”

“Our shared aim was an outcome that best serves consumers, workers and — most importantly — the creative community so vital to the art of visual storytelling. We’re confident this agreement does exactly that,” Ellison said in the statement.

Representatives for WBD did not immediately respond to a request for comment.

The settlement comes after weeks of behind-the-scenes negotiations. It brings an end to what would have been a costly legal battle for both Paramount and the states. Paramount’s agreement with WBD included a so-called “ticking fee” that kicks in Oct. 1. WBD shareholders will receive roughly $7 million per day until the transaction closes. Before the settlement, a trial on the suit was scheduled in March, meaning a resolution would not have happened until well into 2027.

The blockbuster deal, initially announced in February, will combine the Warner Bros. and Paramount studios, CBS, Atlanta-based TNT and TBS, Discovery, HBO, HGTV, and other networks, along with intellectual property such as DC Comics and the Harry Potter film franchise. The combined company will have two major news operations under its belt — CBS News and CNN — and two streaming services.

Bonta made clear during the news conference that the settlement is not a vote of support for this merger. The same sentiment was reflected in a news release from WGA. But Bonta said the settlement is a “strong solution that protects competition and consumers.”

What are the details of the agreement?

As part of the deal, Paramount must release 30 films annually in the first two years, and 32 in each of the following three years, Bonta said. At least four a year must be independent films, and 20% must be blockbusters.

Paramount has also agreed to spend $300 million more per year in U.S. film production, a commitment that comes as studios, streamers and production companies continue to film in other countries, from Canada to Hungary, to cut costs. Bonta said the vast majority of Paramount’s global production takes place abroad. Only about 5% of the company’s films are created domestically, he said. If Congress passes a federal film tax credit, Paramount has agreed that 20% of all film production will be in the U.S. for the first two years and 30% for the next three, Bonta said.

If California or New York passes an uncapped film tax incentive, which Georgia currently has, and Congress passes the federal incentive, Paramount will increase its domestic production to 40%.

Bonta said Paramount agreed to establish an independent board to “ensure independent, objective fact-based reporting at CBS News and CNN.” Bloomberg, which first reported the settlement on Monday, said the states succeeded in securing independent editorial boards for the two news operations. When it was announced, the deal sparked concerns among journalists that Paramount’s ownership could lead to ideological shifts at the news organization. Ellison, Paramount’s CEO, has argued that editorial independence “needs to be maintained” at CNN.

On Sunday, The Wall Street Journal reported Bonta and Paramount discussed selling cable channels as one potential concession, as well as investing $1.5 billion in domestic production. A Monday report by the WSJ said Paramount will avoid having to sell the channels.

If Paramount fails to comply with the terms in the settlement, Bonta said the matters can go before the court.

Is Paramount still planning on relocating to Georgia?

It doesn’t seem likely.

A refresher: Ellison reportedly held meetings with his executive team and said he was considering a move to Georgia, Tennessee, Texas or an unnamed state if Bonta did not negotiate a settlement by Oct. 1, entertainment journalist Matt Belloni reported in August. These were all states that were not suing his company.

A relocation this large would fall into the purview of the Georgia Department of Economic Development. In August, a spokeswoman for the department said it does not comment on “speculation or private correspondence.” But the general consensus among stakeholders in Georgia’s film industry was that it was likely political posturing.

What does this mean for the cable channels still based out of Atlanta?

The settlement brings both good and bad news to the WBD employees still based out of Atlanta. There is now greater certainty of who will control the networks, and confirmation that Paramount will not have to sell off networks as part of the deal.

Still, if the transaction were to close, the two entertainment behemoths need to be integrated. Paramount has said it expects to save about $6 billion in corporate-wide efficiencies, optimizing its combined real estate footprint and streamlining other operations. Plus, the deal carries a hefty debt load — more than $40 billion — and that money will need to be recouped.

Neither company has confirmed workforce reductions or operational changes in Atlanta, but past acquisitions involving the Turner properties resulted in job losses. It could bring another round of job cuts to a workforce already battered by years of industry contraction.

For CNN, there is now an agreement, at least on paper, that it will retain its own editorial decision-making under the new ownership structure.