Paramount-Warner Merger Deal Draws Fire: Critics Say California Sold Out

California's settlement allowing Paramount Skydance to acquire Warner Bros Discovery for $110 billion is drawing sharp criticism from antitrust advocates and lawmakers who say the deal does little to protect competition, jobs, or consumers. The agreement, announced Monday, ends a lawsuit filed by California and 11 other states that sought to block the massive media merger.

Critics argue that California Attorney General Rob Bonta and Governor Gavin Newsom caved to pressure from Paramount CEO David Ellison, who reportedly threatened to move the company out of state if the lawsuit continued. The settlement includes no major structural concessions, such as selling off cable channels or intellectual property, and its key commitments expire within three to five years.

What Does the Settlement Actually Require?

Under the deal, Paramount agreed to create independent editorial boards for CNN and CBS, pay a $30 million penalty per film if it fails to release 30 movies annually, and bargain separately with television distributors. However, these commitments are temporary and do not address the core antitrust concerns raised by the lawsuit.

Notably, the settlement does not require Paramount to sell any cable channels or divest lucrative intellectual property, including franchises like Top Gun, Mission: Impossible, Star Trek, Batman, Harry Potter, and Lord of the Rings. Bonta had previously stated that structural remedies, where a company sells off part of its business, are superior to promises to change business practices.

Critics Blast the Deal as a Sellout to Billionaires

Alvaro Bedoya, a former Federal Trade Commission member and adviser at the American Economic Liberties Project, did not hold back in his assessment.

Today, billionaires have yet again bribed, censored, and bullied their way to the top. Layoffs will follow. People from L.A. to Atlanta will lose their jobs, small businesses will lose their contracts, your cable bill and movie ticket will be even more expensive.

Senator Elizabeth Warren, a Democrat from Massachusetts, also condemned the settlement, calling Paramount a clear candidate for antitrust scrutiny in a future pro-competition administration.

This settlement greenlights an anti-monopoly disaster that will result in higher prices and fewer jobs, and enables a handful of billionaires to call the shots in the American media.

Bonta Defends the Settlement

Bonta insisted the settlement is not a vote of support for the acquisition, acknowledging that it does not serve competition well. He argued, however, that the deal would result in more production in California. Ellison, for his part, said the merger will strengthen competition and benefit consumers and workers.

The settlement highlights a growing split within the Democratic Party between moderates who favor business-friendly policies and progressives who want tougher antitrust enforcement to address consumer costs.

Iowa and Montana Opposed the Lawsuit

Interestingly, Iowa and Montana had asked the US Supreme Court to step in and block the California-led lawsuit, arguing that the deal should be allowed to proceed. This puts Iowa on the side of the merger, reflecting a broader concern that excessive regulation could harm economic growth and investment.

Cinema United, a trade organization representing theater owners including Cinemark, AMC, and Regal, had also urged Bonta to negotiate a settlement to avoid further uncertainty in the industry. The group represents 30,000 US movie screens.

What Does This Mean for Consumers and Workers?

John Bergmayer, legal director at Public Knowledge, warned that the merger leaves fewer studios competing for scripts and talent, gives one company greater power to dictate terms to distributors, and reduces streaming choices.

Consumers will face higher prices, while writers and other creative workers will have fewer employers bidding for their work.

With the deal now moving forward, the long-term impact on the entertainment industry remains to be seen. What is clear is that the settlement has satisfied neither side fully, and the debate over media consolidation is far from over.

Frequently Asked Questions

Why did California sue to block the Paramount-Warner merger?

California and 11 other states filed a lawsuit in July arguing that the $110 billion acquisition would harm competition in the entertainment industry, reduce theatrical and television productions, and lead to job losses.

What concessions did Paramount make in the settlement?

Paramount agreed to create independent editorial boards for CNN and CBS, pay $30 million per film if it fails to release 30 movies annually, and bargain separately with television distributors. These commitments expire within three to five years.

Why did Iowa oppose the lawsuit?

Iowa and Montana asked the US Supreme Court to block the case, arguing that the merger should be allowed to proceed and that excessive regulation could harm economic growth and investment.

Will the merger lead to higher prices for consumers?

Critics argue that reduced competition will lead to higher cable bills and movie ticket prices, as well as fewer streaming choices for consumers.