A federal judge declined Thursday to rule immediately on a proposed settlement between Paramount Skydance and 12 state attorneys general, leaving the last major legal hurdle to the studio’s $111-billion acquisition of Warner Bros. Discovery unresolved for now.
U.S. District Judge Araceli Martínez-Olguín did not indicate how she would rule, but said she wanted more information before deciding whether to approve the proposed consent decree, a court-enforceable agreement that would allow the merger to proceed under certain conditions..
“I’m not the only one who has some questions for you all. There’s lots of interest,” said Judge Martínez-Olguín. “I appreciate people are interested, but I also want to make sure that I have everything that I’m going to consider in front of me.”
The judge said she would issue a ruling “in due course.”
The hearing comes three days after California Atty. Gen. Rob Bonta announced that the two sides had reached an agreement.
It requires the combined company to release at least 30 films in theaters each year, commit at least an additional $1.5 billion to domestic film production and set aside $47.5 million for workers affected by the merger.
“When theater owners have publicly said that supply is the problem, those are voices that carry weight because they’re in the market,” said Paula Blizzard, an attorney for California, during the hearing. “They are the people we’re trying to protect — the businesses and the competition that we are trying to protect.”
The settlement proposal also includes stipulations on how basic cable channel negotiations must proceed, creates a board intended to protect the editorial independence of CBS News and CNN, and bars Paramount from selling or closing its Melrose Ave. lot or Warner Bros.’ Burbank lot while requiring the company to operate them “in a manner consistent with past practices.”
An independent monitor will oversee the settlement implementation. The agreement, if approved by the judge, will be in effect for five years.
“Paramount wants to get to work. Paramount is doing this deal because it wants to compete. Netflix, Amazon, Disney are far larger streaming undertakings,” said Josh Holian, an attorney for Paramount, during the hearing. “Paramount believes that a transaction like this can be transformative in fueling its ability to compete in that market.”
Before ending the hearing, Judge Martínez-Olguín assigned the parties several tasks, which included addressing a letter from U.S. Senator Cory Booker (D-N.J.) who echoed some concerns about the proposal.
Booker, the top Democrat on the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights, asked the judge to conduct an “independent public-interest review” before approving the settlement agreement. Because the U.S. Justice Department closed its investigation of the Paramount-Warner Bros. merger without seeking any remedies, Booker argued, the proposal is “the only enforceable instrument that will govern” the combined company.
Martínez-Olguín asked the parties to submit their responses to Booker’s letter by Monday, Sept. 28 at noon.
Warner Bros. Discovery Chief Executive David Zaslav had told staff earlier this week that he expected the deal to close no later than early October.
The settlement has divided Hollywood, with some saying Bonta bowed to political pressure from Los Angeles Mayor Karen Bass and California Gov. Gavin Newsom. During negotiations, Paramount threatened to move its studio out of state, which Newsom said he took seriously.
After the proposed settlement was announced, Paramount Chief Executive David Ellison said the combined company would remain in L.A.
Many in Hollywood are concerned about the threat of layoffs from the merger. Paramount has told Wall Street it plans to make more than $6 billion in cost cuts. A recent report commissioned by L.A. County estimated that 4,500 jobs could be lost over three years.