UPDATE with Ynon Kreiz named co-CEO: A federal judge approved the Sept. 21 settlement between Paramount and a group of state attorneys general who sued to block its merger with Warner Bros. Discovery, removing the final obstacle to closing the deal.
“The Court finds that the proposed consent decree represents a reasonable factual and legal resolution of the dispute,” U.S. District Judge Araceli Martínez-Olguín wrote today in her long-awaited go-ahead. “The consent decree proposed by the parties is within the scope of the arguments advanced in the pleadings. »
Addressing critics of the settlement unveiled on September 21 between the Blue State AGs and ParaBros, the judge said bluntly: “The Court recognizes that this proposed consent decree reflects a compromise on the claims without a full settlement – a compromise that may leave some dissatisfaction with both parties and the public, but a compromise that saves the risk, time and expense of litigation.”
Martínez-Olguín did not immediately greenlight the settlement, but allowed more than a week for opposition briefs to be filed, setting a deadline of September 28 at noon PT for Paramount and the attorneys general to respond. It was a bit of a struggle as both sides waited for his final signature. Read his full order here.
Paramount CEO David Ellison said last week that it would take about two weeks to officially combine the companies. That would bring us back to next week. The sooner the better for Paramount, as it begins racking up tick-tock fees for WBD shareholders of about $7 million per day starting Oct. 1 if the deal doesn’t close.
Twelve attorneys general led by California’s Rob Bonta had moved the antitrust case forward with a trial date set for March before the parties came together rather suddenly within days. Bonta presented the deal at a news conference with little enthusiasm, describing the proposed solutions while insisting that the deal “is not a blessing” from the mega-deal and that he still doesn’t think two of Hollywood’s biggest players should merge.
The road has been long. Paramount announced the deal in February after a series of hostile offers rejected by WBD. By adding sweeteners, Ellison finally convinced the Warner board to agree to a combination, derailing a WBD-Netflix deal. The case began to move closer quickly until prosecutors filed a lawsuit in July and the judge allowed the case to continue. Paramount agreed not to make the deal while the lawsuit was pending.
Attempts at settlement talks stalled as Bonta and the AGs sought structural solutions such as asset sales to address alleged antitrust violations in three markets: cable programming, mass-release movies and blockbuster movies, the crux of the lawsuit. Ellison hesitated, but the parties eventually came together and discussions accelerated.
There was significant opposition to the deal from the start, but also enormous pressure on Bonta to end the deal as Ellison threatened to move the studio out of California.
In anticipation of the closing, Paramount this week began marketing a $44 billion bond offering. Proceeds from the debt sale will fund the $110 billion acquisition, as well as equity financing. With the coast now clear, the company will move quickly to close the complex transaction that will see it cash out WBD shareholders for $31 per share.
In the first major shakeup under the new regime, Cindy Holland, president of Paramount’s Direct-to-Consumer business, is leaving. Her last day was Tuesday, she said in a company memo. That leaves Casey Bloys, chairman and CEO of HBO and HBO Max Content, as the presumed head of streaming for the Paramount-WBD combination.
A second shoe dropped this morning when Mattel Chairman and CEO Ynon Kreiz resigned rather abruptly. Shortly after Martínez-Olguín approved the settlement, Paramount announced that Kreiz had been named co-CEO with Ellison.
The settlement includes a number of legally enforceable commitments from Paramount over the five years following closing, such as a defined number of theatrical releases, an editorial oversight board for CNN and CBS and separate negotiations with cable network distributors Paramount and WBD. There are certain gaps and no structural solutions have been provided. Read the settlement document here.
Continuing to address critics of the settlement who filed amicus briefs and wrote letters to the court, the judge noted their “dismay at many of the provisions of the proposed consent decree. However, a proposed consent decree like this represents a negotiated settlement that does not fully remedy an alleged violation or even necessarily resolve the ultimate factual and legal issues of a case.”
She said that “these hopes and desires that the proposed consent decree would go further – to achieve more – do not rise to the level of legal violations at which the Court can reject the resolution negotiated by the parties.”
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Gn entert
