Attorney General Mayes Announces Settlement in Warner Bros./Paramount Litigation

PHOENIX – Attorney General Mayes today joined a coalition of 12 attorneys general in securing a settlement with Paramount Skydance Corporation (Paramount), resolving the states' lawsuit alleging the merger of the entertainment giant and Warner Bros. Discovery (Warner Bros.) would harm competition by lowering output and raising prices, hurting both workers and consumers in the process.

"This settlement will support Arizona businesses, including local movie theaters, by ensuring films get theatrical releases that bring audiences through their doors and boost the neighboring shops and restaurants around them," said Attorney General Mayes. "I'm proud to have fought for Arizona's businesses."

Today’s settlement, pending approval by the court, includes a five-year court enforceable commitment 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 he merger of Paramount and Warner Bros., 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. 

Today's settlement includes:
 
An Annual Film Release Commitment: Paramount has agreed to a five-year term, where the merged company will commit 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.

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 health care 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 (NAAG) for more 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. basic cable channels, preserving the existing competitive dynamic between the companies. Preserving competition 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. Additionally, the company agrees to a News Editorial Independence Board to help CNN and CBS maintain editorial independence.
 
Ongoing Monitoring: The company also agreed to appointment of an independent monitor to oversee its compliance with this agreement.  
 
In securing this settlement, Attorney General Mayes joins the attorneys general of California, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington. 

A copy of the consent decree is available. A copy of the joint motion is available.