State attorneys general agree to settle Paramount merger lawsuit

(CNN) — The state attorneys general suing to block Paramount’s acquisition of Warner Bros. Discovery, CNN’s parent company, have reached a settlement, clearing the way for the companies to complete the merger.

California Attorney General Rob Bonta, who led the 12-state coalition that sued to block the merger, announced the settlement at a press conference in Los Angeles on Monday.

“While the timing is not yet fixed, we expect the merger will close no later than early October,” Warner Bros. Discovery CEO David Zaslav told staffers in a memo.

The merger will combine Paramount’s film and television studios, CBS and the Paramount+ streamer with Warner’s studios, HBO, CNN and other cable networks.

In exchange for the states dropping their antitrust lawsuit, Bonta said, Paramount will make various commitments, including to release 30 films per year in theaters and to “establish a news editorial independence board to support CBS News’ and CNN’s continued editorial independence” and “ensure independent, objective, fact-based reporting.”

Under the settlement terms, that board must be established within 180 days of closing and comprise of five “established journalists,” active or retired, each with at least 10 years of experience.

The panel will resolve disputes over “alleged reporting bias or failure to meet agreed reporting fairness standards” and monitor “editorial independence, including from… ownership and shareholders.” Members will be appointed by Paramount’s board of directors, and “no more than two” may be “affiliated” with the same political party.

The settlement will allow Paramount CEO David Ellison and his father, Larry Ellison, the billionaire Oracle co-founder, to dramatically expand their media empire.

“Our goal has always been to build a stronger Hollywood — one with more stories told, greater choice for consumers and stronger competition,” David Ellison said in a statement. He thanked Bonta and the other attorneys general for “engaging in good faith to find a path forward.”

The deal has been politically fraught in part because Larry is a longtime ally of President Donald Trump and David has cultivated close ties to the Trump White House as he’s pursued opportunities to turn Skydance, his relatively small production company, into a global media giant.

The merger is one of the largest in US history. It is financed with the help of sovereign wealth funds from Saudi Arabia, Qatar and Abu Dhabi that will indirectly own just under a 50-percent equity stake in the merged Paramount–WBD. Trump’s FCC recently approved Paramount’s request to exceed the standard 25-percent cap on foreign broadcast ownership.

The political schmoozing — Paramount held a private dinner with Trump in April — and the Middle Eastern financing galvanized opponents who warned that the merger would concentrate too much media power in the hands of the president’s allies.

Paramount asserted that the merger was not anticompetitive and would help Hollywood studios compete in a media industry increasingly dominated by tech companies.

Bonta and the other state AGs secured an early victory from a California judge who found that the merger would likely violate antitrust laws.

A trial date was scheduled for early March.

Paramount accepted the delay but pushed hard for a settlement ahead of October 1, when a costly “ticking fee” would begin increasing the acquisition’s cost. The extended delay and the fee could have potentially jeopardized the deal altogether.

Settlement talks led by Bonta heated up in the past week, sources with knowledge of the negotiations told CNN.

Some of the other state attorneys general came away disappointed by the outcome because they wanted stronger concessions.

One of those attorneys is Connecticut AG William Tong, who said in a Monday statement that his office “wanted and demanded full divestiture of CNN and CBS News,” but did not get it. “I am deeply disappointed that we could not do more,” he wrote.

Tong noted, however, that “we have secured an editorial board structure that will meaningfully help protect editorial independence for both news organizations, and it will be enforceable under the consent decree.”

The Writers Guild of America also settled its lawsuit aiming to block the merger. The union said in a statement that Paramount agreed to “prohibit writer layoffs at CBS News Broadcast for 5 years, and to pay $17.5 million to our health fund along with our attorneys’ fees in the litigation.”

The-CNN-Wire
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