paramount skydance

Last week’s settlement of the antitrust lawsuit between state attorneys general and Paramount Skydance over its planned merger with Warner Bros. Discovery marked a clear victory for David Ellison.

If approved by a judge, the settlement would clear the way for the emerging Hollywood mogul to complete the blockbuster $111-billion purchase after months of uncertainty over whether the deal would overcome intense opposition in Hollywood.

What’s more, Ellison achieved the settlement without having to agree to any so-called structural remedies that California Atty. Gen. Rob Bonta had been seeking.

But Ellison can hardly rest on his laurels. The Paramount Skydance chief executive will have to work hard to repair badly frayed relations with Hollywood talent who fiercely opposed the consolidation of two historic studios as a bad deal for workers. And the 43-year-old tech scion will be constrained by some of the terms that were imposed in the consent decree negotiated with Bonta and other attorneys general.

“I don’t envy David Ellison. You bought this ship, now you’ve got to sail it. And you’re facing threats on all fronts: bad will, everybody rooting for you to fail and operating a business in an incredibly uncertain, challenging time,” said Gabriel Kahn, a professor at the USC Annenberg School for Communication and Journalism. “At the same time, you are going to have to mortgage everything to make these debt payments.”

As part of the deal, Paramount agreed to a slate of requirements that, if it fails to deliver, could induce financial penalties, litigation and other costs.

For one thing, Paramount would have to pay a penalty and divest the Miramax film studio if it does not distribute 30 or more films a year in theaters.

The studio also pledged to spend $300 million more each year on film production in the U.S. and further boost its film spending if the federal government adopts a film tax credit of at least 20%; it agreed not to sell or close its lot on Melrose or the Warner Bros lot in Burbank and to operate them “in a manner consistent with past practices,” until 2031.

Additionally, Paramount is required to establish a board to ensure editorial independence for CNN and CBS News, though it will be appointed by Paramount directors with the authority to remove its members.

Beyond attempting to smooth the industry’s many ruffled feathers, Hollywood’s newest mogul must now also wrestle down an astonishing $80 billion in debt accrued as a result of this highly leveraged merger.

Ellison’s father, billionaire Larry Ellison, late last year agreed to backstop the $47 billion in equity needed to complete the acquisition. Royal families from Saudi Arabia, Qatar and Abu Dhabi have agreed to contribute another $24 billion for an equity stake by assuming some of Ellison’s financial commitments.

The months-long battle was bitter and hard fought and enmity within the industry has yet to subside.

On Tuesday, the morning after Bonta announced the settlement agreement, protesters converged outside of Paramount Skydance’s Melrose Avenue gate criticizing the deal. Some held fake gravestones that read: “RIP local business,” “RIP crew call” and “RIP creativity.”

Two days later, a coalition of several groups including the Committee for the First Amendment, filed an amicus brief asking the court to reject the consent decree, saying that it failed to address the anti-competitive concerns of the state attorneys general and would not protect jobs or consumers.

The sense of betrayal was acute.

“Hate to say it but we all got played,” wrote actor Mark Ruffalo, a leading organizer in Block the Merger, a grassroots organization made up of 1st Amendment advocates and Hollywood celebrities who aggressively opposed it, in a post on X.

Sen. Elizabeth Warren (D-Mass.) repudiated the deal, saying in a statement. that it “enables a handful of billionaires to call the shots in the media.”

The entertainment unions struck more cautionary notes.

SAG-AFTRA, the actors union, wrote in a statement that the deal “addresses some of our deep concerns,” but added, “We hope that the process of engaging with the attorneys general has impressed upon them the fact that in addition to collective bargaining, our members rely on the law to help protect our interests. These are the lowest standards that our employers must meet.”

Bonta, who had spearheaded the antitrust suit, gave a tepid endorsement of the consent decree.

“I want to be clear about something right up front: This settlement is not a vote of support for this merger. It is not a blessing,” he said.

During Paramount’s heated and often contentious legal and political wrangling to wrest control of Warner Bros., many in Hollywood became increasingly apprehensive. Combining two legacy studios, opponents feared, would bring even more job losses to an industry already battered by runaway production.

The skepticism hardened as the Ellisons made several controversial moves after Skydance acquired Paramount last summer. They included agreeing to pay $16 million to settle a lawsuit filed by President Trump over a “60 Minutes” interview segment, canceling the “Late Show With Stephen Colbert,” ending diversity, equity and inclusion programs and appointing Bari Weiss as editor in chief of CBS News, who engaged in a wholesale overhaul that led to a revolt at the esteemed “60 Minutes.”

When the newly formed Paramount Skydance announced its intention to swallow up Warner Bros. Discovery just months later, a massive wave of political pressure and public backlash began.

But the Ellisons dug in.

In January — after Netflix threw a surprise wrench into the Ellisons’ designs on Warner Bros. by offering $72 billion, which the studio accepted — Paramount took Warner Bros. to court and launched a hostile takeover bid.

A month later, Netflix walked away from the deal and collected a $2.8-billion termination fee after the Warners’ board agreed to Paramount’s higher all-cash bid.

But many in Hollywood began agitating against the planned merger and pushing for guardrails and protections.

In April, Block the Merger released an open letter declaring their opposition; its list of professionals across the film and television industry eventually swelled to nearly 6,000 names, including Ruffalo, Jane Fonda, Ben Stiller, Sofia Coppola, Trey Parker and Denis Villeneuve.

“The future of free media and a strong entertainment industry in America is at stake here,” said Norm Eisen, co-founder and executive chair of Democracy Defenders Fund, who also helped lead the Block the Merger campaign.

The Writers Guild of America sued to stop the deal, saying it violated antitrust laws. The union last week settled its lawsuit, citing the costs of continuing the litigation, after Paramount agreed not to lay off writers at CBS Broadcast News for years and to pay $17.5 million to the union’s health fund. Nonetheless, the guild said: “We continue to believe the merger will cause damage to writers and the industry at large.”

Some backed the megadeal, including power broker Ari Emanuel.

The WME executive and chairman and CEO of TKO came out swinging, excoriating the antitrust suit, in an op-ed for the Wall Street Journal in July. “They say they are protecting competition. Their actions threaten to destroy it,” he wrote.

The Ellisons’ ongoing ties with Trump — whose administration has clashed with ABC, CNN and other networks — only deepened the suspicions.

Oracle co-founder Larry Ellison has been a Trump supporter and friend. In addition to political donations, he participated in a Nov. 14, 2020, conference call that discussed ways to challenge Trump’s presidential election defeat.

Both Ellison and his son David reportedly promised the president they would make “sweeping” changes at CNN, which is owned by Warner Bros. Discovery.

In June, David Ellison attended the “UFC Freedom 250” event hosted by Trump on the South Lawn of the White House, and last week he was a guest at the White House state dinner honoring Chinese President Xi Jinping.

Amid the high-level public-facing Trump engagements, Paramount had been quietly trying to allay fears about the relationship to industry insiders.

Two individuals in the entertainment industry, who declined to be named for fear of retaliation, said that Paramount sent emissaries to extend a kind of olive branch, explaining their commitment to Hollywood and downplaying the relationship as a necessary step to get the deal done.

In August, Ellison published an op-ed in the New York Times in which he extolled his lifelong love of movies and laid out his case that he could be “trusted as a steward” of the media giant he was amassing, that includes two institutional news organizations (CBS and CNN) and the legacy studios he wished to combine.

However, his seemingly conciliatory message was undercut that same month when he threatened to relocate Paramount’s base to Tennessee or Texas. Ellison built his Skydance production in Santa Monica.

Across the industry, workers viewed the mixed messaging with wariness and anger.

“If Ellison truly wants to be a steward and do the things that he said he can do and wants to do in that article, I think people would welcome it,” said Pamala Buzick Kim, a co-founder of Stay in LA, the 23,000-member grassroots campaign aimed at boosting local film and television production. “They just have no evidence of it.”

Aside from the bad blood, Ellison’s biggest challenge may be financial.

At a time of massive industry upheaval, most observers believe that the company will have to lay off droves of workers to bring its costs down.

“I will honestly say that the biggest work that they have cut out for them is servicing this debt, and that’s going to guide every decision,” said Kahn, the USC professor.

“Now they’re going to have to fire lots of people in order to reduce costs to be able to make this deal pencil out, and they’re going to be skating on the razor’s edge to make sure that they have enough revenue coming in going forward to service this debt. They have almost no room to maneuver.”

But Paramount has one thing working in its favor: leverage. David (as in Ellison), for better or worse, is now the industry’s Goliath.

“I think temper tantrums can be easily forgotten if the work is there,” said Buzick Kim. “I think most people would be happy to leave it behind them — if the work is there.”

Times staff writers Meg James, Stephen Battaglio and Samantha Masunaga contributed to this report.

Did California come out a winner when Atty. Gen. Rob Bonta settled a multi-state lawsuit against Paramount Skydance on Monday, allowing its $111-billion purchase of Warner Bros. Discovery to move forward?

That’s the question everyone is trying to figure out, as the 32-page agreement is parsed, with pundits pouring over minutiae of cable streaming and tax credits. I’ll leave that to the business experts, but I’m here to give you a big picture of politics, power and possibilities — and one short but unsatisfying answer about whether this deal is good for the Golden State: Yes and no.

I’ll start with this: Did California win is the wrong question. There was always something bigger at play here that was lost behind the fear of further decimation to an industry so central and crucial to the state. The question the lawsuit asked is, “Do we live in an America where government institutions are so broken that power makes its own rules?”

The settlement might not give the entertainment industry all it hoped for but it was “a fight worth fighting,” said George Hay, a professor at Cornell Law School and a former attorney with the U.S. Department of Justice’s Antitrust Division, because it sought to answer that question in favor of consumers, and showed that states like California can and will step up to fill a dangerous void.

Under the Trump administration, the U.S. Department of Justice hasn’t so much abdicated its responsibility to enforce antitrust laws — it has embraced an oligarchic ethos that seems happy to feed the American economy into the mouths of behemoths, allowing companies such as Paramount free reign to gobble up whatever lies in their paths like an old-school Pac-Man.

Our president personally invests in industries he’s supposed to regulate (I’m looking at you, Silicon Valley). Corporations dump money into elections that average people can never hope to match. The free press is under increasing attack with multiple outlets banned from the White House — including CNN, which Paramount hopes to own along with CBS and whose editorial independence is at least addressed in this settlement, albeit weakly.

States, even powerful states such as New York and California, don’t have the muscle or money of the federal apparatus, and were never meant to play the role of national enforcer on issues such as these.

The fact that Bonta and the 11 other states involved in the antitrust litigation pulled together not just a credible, but effective team is a victory for all American consumers, and a message to other Pac-Man companies out there that even if federal regulation is on life support, there are still rules.

The states “showed that they could quickly and effectively put together a formidable litigation team, and achieve significant initial success. That’s a big deal. That that changes the role of the states for a long time into the future,” said William Kovacic. He’s a law professor at George Washington University and a former chair of the Federal Trade Commission, so like Hay, he knows a bit about antitrust enforcement.

“This has a ripple effect that goes through the entire federal enforcement system because they showed they could do something that was very difficult,” Kovacic said. “That’s a big institutional win for the states.”

To hear Bonta describe it, California is absolutely a winner in its own right, though, and this will be “very good” for the state. Which to be fair, is exactly what any decent politician would say.

“It will be good for consumers, good for prices, good for jobs, good for choice, quality, competition,” Bonta told me Monday afternoon.

Kovacic is a bit more measured, calling it a “modest win.”

The deal has many parts, but it covers a five-year period in which the new Paramount mega-studio must release between 30 to 32 films each year, many in theaters and some independent. It also has to keep open and running both the Paramount and Warner Bros. lots, a not-insignificant source of L.A. jobs — and maybe one of the most visible wins for the city.

The new company also must spend at least $1.5 billion over the five years on production in the U.S., and increase that figure if there are certain, uncapped federal or state tax credits available to them.

In California, where the budget deficit is in the billions, creating uncapped credits may be a hard sell, but Bonta told me he’s making it a priority in the next legislative session and will push the next governor — likely Xavier Becerra, who once held his job — to back them.

“I think we’re going to get it in California,” he said. It’s somewhat important because the settlement doesn’t specifically address production in California — and tax credits from other states have been drawing production away for years.

We’ll see how successful Bonta is on that endeavor — he hasn’t always gotten what he wants from governors.

Much has been made about the recent threats from Paramount Skydance Chief Executive David Ellison to move business operations out of California. That pressure has been cited as one of the factors pushing the state to settle, and it probably was — but not just because of Ellison.

Gov. Gavin Newsom made it clear that he preferred a settlement to a drawn-out court case, especially after that threat.

You may recall our governor has presidential aspirations, and is in a long-running battle with Trump over whether California is a wasteland for business beset by fraud and regulation, or a utopia of economic activity fueling the world’s fourth largest economy. Paramount reupping its threat to leave, or even worse, decamping for someplace such as Nashville, is not a great look.

So this case, which was never going to be a slam-dunk to win in court and which could easily have run into 2028 if it proceeded, was never a winning issue for Newsom.

Newsom Monday called the deal “a practical path forward,” which it definitely is — for him.

Hay, of Cornell, said it was a “big blow” when the governor failed to back Bonta and go all-in on litigation.

“Once [Newsom] once came out on the other side, it made things really, really difficult,” Hay said.

So there was pressure on Bonta to make a deal even from his friends, though Bonta told me that “what you call pressure was just noise to me. I never felt pressured in this process.”

But of course, nearly everything that happens in politics and litigation is about pressure — who has the power to apply it and who has the power to withstand it. Bonta, to his credit, applied pressure where Paramount never expected it.

“If I were in California, I’d be proud of the attorney general. At the end of the day, he got the best he could,” Hay said. “I’m glad they were there when the government bailed out because it made Paramount tow the line, and maybe that’s all that we could hope for.”

The Paramount settlement is more about possible than perfect, but it proved that states — and consumers — are not powerless, and every brawl that proves that is, as Hay said, a fight worth fighting.

The Federal Communications Commission on Thursday granted Paramount Skydance’s request to allow Middle Eastern royal families to hold a substantial stake in a merged Paramount-Warner Bros. Discovery.

The sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi are slated to indirectly own nearly 50% of the equity in David Ellison’s proposed mega-studio, Paramount-Warner Bros. That will give them a hefty stake in CBS, CNN, Comedy Central, HBO and two historic Hollywood film studios.

Ellison needed FCC approval because the deal will change the ownership structure of CBS.

As part of the Communications Act of 1934, Congress placed restrictions on foreign ownership of broadcast outlets because of concerns about national security. Current rules prevent foreign investors from owning more than 25% of a company that holds a U.S. broadcast license — unless the FCC determines that foreign ownership would serve a public interest.

CBS owns more than two dozen TV stations with FCC licenses, including KCBS-TV Channel 2 and KCAL-TV Channel 9 in Los Angeles.

“Upon review of [Paramount’s] Petition and consideration of the record of this proceeding, we find that the public interest would be served by granting the Petition,” FCC said in its ruling, noting that Paramount has said the proposed ownership changes would “not result in a transfer of control of Paramount.”

Instead, “Ellison family will retain a majority of the voting interests and control of Paramount,” the FCC said.

FCC Chairman Brendan Carr, an appointee of President Trump, has been supportive of Paramount’s takeover of Warner Bros. Trump and his lieutenants, including Defense Secretary Pete Hegseth, have been cheering for Ellison to control CNN, a Warner property.

Anna M. Gomez, the lone Democratic FCC commissioner, slammed the agency’s decision, saying it “just let some of the most repressive governments in the world indirectly control nearly all of a combined Paramount-Warner Bros.”

“An investment this large in one of America’s biggest media companies doesn’t just buy equity, it secures influence over what gets said and what gets made,” Gomez said. “That’s why I called for this new and novel issue to go to a full commission vote given what’s at stake. Instead, the FCC snuck this ruling out as a staff-level decision, with no public vote and no accountability for a call of this magnitude.”

Ellison’s billionaire father, Oracle co-founder Larry Ellison, in February agreed to personally guarantee the $47 billion in equity needed to buy out Warner Bros. Discovery’s existing shareholders for $81 billion. Ellison and longtime Skydance investor, RedBird Capital Partners, then entered into agreements to assign some of their purchase rights to the sovereign wealth funds.

The funds plan to invest $24 billion in the Paramount-Warner deal. Saudi Arabia’s Public Investment Fund is set to contribute $10 billion while the Qatar Investment Authority and Abu Dhabi’s L’imad Holding Co. will separately add $7 billion.

Paramount has separately lined up debt financiers to help pull off the leveraged buyout of Warner Bros. Discovery — Hollywood’s biggest merger in decades. The deal has been stalled by an antitrust challenge brought by California Atty. Gen. Rob Bonta and 11 other Democratic attorneys general, representing such states as New York, New Jersey, Colorado, Nevada and Oregon.

The foreign ownership rule was adopted nearly a century ago because members of Congress wanted to make sure that hostile foreign players were barred from using U.S. airwaves to spread propaganda, particularly in times of war.

“We appreciate the FCC’s careful review and are pleased that it has granted Paramount’s petition,” Paramount said in a statement, adding the Trump administration’s Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector had separately recommended approval of the deal, subject to several conditions to protect the data of the company’s U.S. based consumers.

Paramount said that, once the deal closes, the Ellison family and RedBird would “collectively hold the largest equity stake in the combined company and 100% of the voting shares, with no other equity participant having any governance rights.”

Paramount has two classes of stock — an ownership structure that will be replicated in a merged Paramount-Warner Bros.

The Ellison family owns 77.5% of Paramount’s voting Class A common stock. RedBird indirectly holds the remaining 22.5% of the Class A shares. The Ellison family separately has 40% of the non-voting Class B shares.

“At a time when the media industry faces unprecedented competitive pressure from dominant big tech companies, a combined Paramount-WBD will have the scale and resources necessary to compete, invest, innovate, and deliver premium content to audiences worldwide,” Paramount said in its statement.

Fox Corp.’s $22-billion acquisition of San José-based Roku, operator of streaming services and seller of hardware devices, seemed like a straightforward deal when it was announced in June: A growing media company was looking to bolster its presence in the fast-growing streaming industry.

But, on Wednesday, the Trump administration weighed in.

Fox Corp. and Roku said that the companies received requests from the Justice Department on Tuesday for additional information in connection with its review of the merger.

While Fox and Roku downplayed the requests, saying that they had expected the outreach, the timing of the move raised eyebrows among some analysts, who said it could signal further scrutiny of the transaction by the Justice Department.

“The president has been outspoken on the fact that he will take retaliatory action against networks that say things that he doesn’t agree with, or they do things that he doesn’t agree with,” said Rob Enderle, principal analyst at advisory services firm Enderle Group.

The action follows President Trump’s surprise over Fox’s ouster of anchor Maria Bartiromo. She was pushed out after she had shared internal company texts with the White House, which sources told The Times may have been the breaking point.

Trump said on social media that he couldn’t believe that Bartiromo will no longer have her shows on Fox. “Her fans, of which there are many, will not be happy,” he wrote on Truth Social on Sept. 3.

Associate Atty. Gen. Stanley Woodward said the Justice Department could not comment on pending matters but said in a statement: “We can affirm that this DOJ under President Trump’s leadership will continue to prioritize affordability for all Americans across our economy.”

Fox announced in June its plans to acquire Roku for $22 billion, which would give the company access to Roku’s 100 million households that use its platform to connect to different streaming services. The deal would benefit Fox’s advertising business, as well as make it less reliant on traditional pay TV platforms.

Fox and Roku said they expect the merger to be done by the first half of 2027, subject to regulatory and shareholder approval, according to a Sept 9 filings with the U.S. Securities and Exchange Commission.

“FOX and Roku will continue to work cooperatively with the DOJ in its review of the Mergers,” Fox said in its filing.

Some legal experts said it is fairly standard for the Justice Department to make an additional request for information.

“It doesn’t mean that their review is going to be more extensive than usual,” said Ray Seilie, an entertainment attorney at law firm Kinsella Holley Iser Kump Steinsapir.

For example, the Justice Department made a second request for information when it reviewed Paramount Skydance’s deal to buy Warner Bros. Discovery, he said. The merging companies typically send information that helps the government figure out what the market impact will be of a merger, he added.

The Justice Department ultimately approved Paramount’s planned acquisition, despite opposition from some industry stakeholders. State attorneys general and the Writers Guild of America have sued Paramount over the deal, raising antitrust concerns. Others have pointed out close ties between Trump and Larry Ellison, a financial backer of the deal, who has also donated money to a group that supports Trump. Ellison’s son, David, is chief executive of Paramount Skydance.

Legal experts and analysts said they don’t think the combination of Fox and Roku raises antitrust issues because they are not dominant players in streaming and have businesses that complement each other.

But one wild card is Trump.

“You never know what Trump is going to seize on and decide he wants to do,” said Bryan Sullivan, a partner with law firm Early Sullivan Wright Gizer & McRae on whether Trump will take retaliatory action through the Justice Department in the Fox-Roku deal. “It’s chaos in the federal government and it could very well happen because of that reason, but it could also just be a blip and not a big deal.”

Times staff writer Stephen Battaglio contributed to this report.