California officials have agreed to settle lawsuits that sought to block the proposed $81 billion merger between Paramount and Warner Bros., a move that effectively clears a significant hurdle for the transaction to proceed. The settlement, reached with State Attorney General Rob Bonta and the Writers Guild of America, has drawn immediate criticism from figures in Hollywood, including actor Mark Ruffalo, who characterized the decision as a major victory for former President Donald Trump.
State Attorney General Rob Bonta, alongside 11 other state attorneys general, had initiated legal action to prevent the merger. The agreement announced Monday aims to address concerns about job security, consumer costs, and the independence of news operations.
Paramount CEO David Ellison welcomed the settlement, stating that it provides "complete clearance" for the merger and will help "build a stronger Hollywood." The company has pledged to increase domestic film production by at least $1.5 billion over the next five years, commit $47.5 million to a fund for workers displaced by the merger, and maintain a minimum release schedule of 30 films annually for the next two years, followed by 32 films for the subsequent three years. Failure to meet these film release targets could result in divestment from Miramax Studios and financial penalties.
Additionally, the settlement requires Paramount to negotiate separate deals for current Paramount and Warner-owned basic cable channels for the next five years, a measure intended to help stabilize consumer prices. A "News Editorial Independence Board" will also be established to monitor news operations at CBS and CNN. Governor Gavin Newsom praised the deal, asserting it protects California jobs and safeguards the editorial independence of news organizations.
However, critics have voiced strong opposition, decrying the settlement terms as inadequate and accusing state attorneys general of succumbing to corporate pressure. Alvaro Bedoya, senior adviser at the American Economic Liberties Project, warned of potential layoffs, increased costs for consumers, and harm to small businesses.
Mark Ruffalo publicly criticized Governor Newsom on X, formerly Twitter, stating, "Gavin Newsom hands huge win to Trump and his billionaire cronies." Ruffalo had previously urged Attorney General Bonta not to settle the lawsuit, emphasizing the support from thousands of filmmakers.
The merger brings together key news networks, including CNN, which faced scrutiny from the Trump administration. Connecticut Attorney General William Tong, who was among the plaintiffs, stated that his primary goal was to protect the editorial independence of CNN and CBS News, expressing a desire for the divestiture of these news organizations. Tong noted that Paramount had initially refused to agree to any editorial independence measures for the news outlets.
The Writers Guild of America also settled its separate lawsuit, acknowledging the difficulty of continuing the legal fight alone. The union maintained its belief that the merger would be detrimental to writers and the broader industry but cited the high cost of litigation for a nonprofit organization.
New York Attorney General Letitia James indicated her office would monitor the company's compliance with the agreement. The settlement addresses concerns about the potential relocation of Paramount from California, a move that had been feared to result in significant job losses and economic impact.
Paramount had agreed to delay the transaction to allow legal challenges to proceed but ultimately sought a settlement as the financial implications of a protracted process grew. The company had been obligated to pay shareholders a "ticking" fee of $7 million for each day the deal was not closed past September 30. The current valuation of the merger, including debt, is approximately $111 billion.
Prior to the settlement, some lawmakers, including Democratic Senators Elizabeth Warren and Cory Booker, had encouraged states to maintain their opposition to the merger. Critics continue to express concerns about further consolidation in an industry already dominated by a few major players.