Paramount and Warner Bros. Discovery Merger Is Official, New Company Name Revealed

Hollywood’s latest mega-merger has cleared its final major hurdle. Paramount’s $111 billion acquisition of Warner Bros. Discovery has received court approval, paving the way for two of the industry’s biggest legacy studios to officially come together.

The deal is expected to close on October 6, putting CEO David Ellison at the head of a massive entertainment operation spanning movies, television, streaming, cable and news.

After months of legal challenges and antitrust concerns, U.S. District Judge Araceli Martinez-Olguin signed off on a settlement between Paramount, the states challenging the acquisition and the Writers Guild of America.

The newly combined company will operate under the name Paramount Warner Bros., bringing two of Hollywood’s most recognizable studio names under one roof.

Martinez-Olguin said the agreement “represents a reasonable factual and legal resolution of the dispute,” adding, “The parties’ proposed consent decree falls within the scope of the case made by the pleadings.”

One of the more interesting parts of the settlement involves theatrical movies, and for film fans, there’s actually something pretty exciting here.

Paramount Warner Bros. will be required to release at least 30 theatrical films per year during its first two years. That number increases to 32 movies annually for the following three years. There are also minimum requirements for wide and independent releases, while at least half of those movies must be produced or co-produced by the combined company.

The agreement also protects theatrical exclusivity. Qualifying movies must maintain a 45-day theatrical window along with a 90-day SVOD holdback before arriving on streaming.

Those requirements have some serious teeth. Missing the annual theatrical quota carries a $30 million penalty for each movie the company fails to release. If those shortages aren’t corrected, Paramount’s stake in Miramax could ultimately be put up for divestiture.

The settlement goes beyond movies. Paramount and Warner Bros. must keep negotiations involving their basic-cable businesses separate. Failure to follow that requirement could force the company to divest channels including BET, VH1 and Comedy Central. Major properties such as CNN and New Line Cinema aren’t included among the assets that could be forced into those particular divestiture scenarios.

CBS News and CNN will also operate under the supervision of a new five-member independent board responsible for editorial standards, with its members selected by Paramount.

The court specifically pointed to the possibility of forced studio and cable-channel divestitures as an important safeguard if Paramount Warner Bros. fails to live up to the terms of the agreement.

“Further, the proposed consent decree imposes these requirements on film distribution and basic cable negotiations in the midst of a rapidly-changing marketplace,” Martinez-Olguin wrote.

“The Court therefore finds that the proposed consent decree reflects a settlement between the parties that is a fair, reasonable, and good faith approach to address the competitive harms alleged in the Complaint, and does not violate the law or public policy.”

Martinez-Olguin also rejected a request for a temporary restraining order from Paramount subscribers who filed the first lawsuit challenging the merger. The subscribers argued that combining the companies would substantially reduce competition across streaming, theatrical distribution and news in violation of antitrust laws.

With the legal roadblock cleared, Paramount is already putting its leadership team into place. Former Mattel CEO Ynon Kreiz will join the company as co-CEO, overseeing day-to-day operations and helping integrate the two businesses.

The announcement follows the departure of Paramount streaming chief Cindy Holland, which points toward HBO boss Casey Bloys potentially taking control of the combined company’s streaming operation after the merger closes.

There has obviously been plenty of doom and gloom surrounding this deal, especially when you consider how enormous Paramount Warner Bros. will be and how much entertainment will sit under one corporate roof. Those concerns aren’t going to disappear just because a judge approved the merger.

Still, the commitment to at least 30 theatrical movies every year is pretty exciting. At a time when movie fans are constantly hearing about shrinking theatrical slates and studios focusing heavily on streaming, a legally enforced commitment to putting that many films into theaters is something worth watching.

Hopefully, the worst-case scenarios people have been predicting don’t come to pass and the merger results in Warner Bros. and Paramount continuing to make a wide variety of great movies rather than simply becoming a machine for cutting costs.

We’ll find out soon enough. Paramount Warner Bros. officially begins its next chapter when the $111 billion deal closes on October 6.

Source: THR