Paramount/WBD merger conditions give the public "virtually nothing," judge is told

“The proposed consent decree requires no divestiture as a condition of closing. Instead, it relies on conduct commitments that leave important pleaded harms unaddressed even when the combined company fully complies,” the Latin American group said. At a hearing yesterday in US District Court for the Northern District of California, Martínez-Olguín told lawyers that “the court isn’t a rubber stamp of your agreement… I have some questions,” Variety reported. Martínez-Olguín reportedly said she wants to ensure “that this is not something that was the result of collusion, but instead was more of an arm’s length process.” Martínez-Olguín asked the parties to submit replies to a letter sent by Sen. Cory Booker (D-N.J.), who said the companies should be required to explain “how each provision remedies each harm alleged in the complaint.” Booker wrote that “the Court should measure the proposed remedies against the relief the States originally sought: an injunction blocking the merger altogether,” and argued that the settlement doesn’t address the lawsuit’s core claims that the merger is anticompetitive and will eliminate jobs. Judges evaluating settlements generally look at whether a deal resolves the lawsuit’s complaint and whether it was tainted by collusion or corruption. Even if a judge personally does not like a settlement, the judge may still approve it if it meets the minimum legal standards for fairness and reasonableness. The free speech and media groups’ filing said the deal with Paramount should be rejected “because it is both procedurally and substantively unfair to third parties and the public.” The filing responded to each major provision in the proposed settlement that was submitted for the court’s approval. The film distribution guarantees “appear to lock in fewer films post-closing than the parties are committing to produce in 2027 on their own,” the groups said. The commitment to release 30 films is lower “than what the companies have together forecasted to investors for 2027 as independent companies,” the filing said. Warner Bros. projected it would release 19 films while Paramount forecast 15 or more, the filing said. The groups criticized a related condition requiring four independent films each year. The settlement’s definition of “independent film” includes any movie based on an original screenplay even if it is wholly financed, developed, and owned by the studio, the filing said. The settlement requires the post-merger entity to conduct separate negotiations for the licensing of basic cable channels owned by Paramount and Warner Bros. Bonta’s office said the condition, which lasts for five years, would “preserv[e] the existing competitive dynamic between the companies” and help “keep prices down for consumers.” This provision does not apply to premium cable channels, streaming services, and broadcast content. The free speech and media groups’ filing said this means “the Combined Entity still would be free to use its power in other offerings—a combined HBO and Showtime (premium cable channels), a combined HBO Max and Paramount Plus (streaming services), and CBS (broadcast)—to extract higher prices in basic cable negotiations, as this form of leveraging is carved out.” The negotiation provision also doesn’t resolve the states’ allegation that combining the companies’ cable portfolios would lead to reduced investment in basic cable channels, the filing said. Bonta defended the settlement by saying it will guarantee “massive investment in domestic film production and provid[e] enforceable guardrails to help keep cable prices competitive.” He said the deal “is not a vote of support for this merger. But we believe this settlement, which resolves our antitrust concerns in every market alleged in our case, protects competition and consumer choice, and puts workers’ needs, concerns, and futures first, is the best course of action.” The Writers Guild of America reluctantly settled its own lawsuit against the merger after learning of the agreement with California. The Writers Guild said its settlement prohibits writer layoffs in the CBS News broadcast division for five years and requires $17.5 million in payments to the group’s health fund. “We continue to believe the merger will cause damage to writers and the industry at large,” the Writers Guild said. “Now that the attorneys general have settled with Paramount, however, as a nonprofit, the WGA must contend with the reality of forging ahead alone, with no backing from government enforcers, with a complex antitrust lawsuit that would cost millions of dollars to pursue through trial.” A Bloomberg article said the Paramount/California deal was initially opposed by Massachusetts, New York, Connecticut, and Minnesota. But attorneys general in those states reportedly “concluded the expense of the legal battle was not justifiable without California at the helm.”