Last week California Democrats — including Governor Gavin Newsom, LA Mayor Karen Bass, and AG Rob Bonta buckled under pressure and got 12 states to drop their antitrust lawsuit against Paramount’s $111 billion merger with Warner Brothers. Worse: they did so without affixing any meaningful conditions or divestments, ensuring that the deal, as with all big deals before it (see: AT&T/Warner Bros), results in mass layoffs, higher prices, and less competition.
Free speech and consumer rights groups are attempting one last Hail Mary to try and block the deal: they’re urging U.S. District Judge Araceli Martínez-Olguín to refuse to approve the settlement. In a government filing, lawyers for groups like Free Press, Freedom of the Press Foundation, and Future Film Coalition say the settlement provides “virtually nothing,” and that Bonta “publicly criticized the very behavioral remedies that the parties now ask the Court to approve.”
They also take direct aim at Bonta for criticizing many of Paramount’s proposed weak settlements before ultimately buckling to political and lobbying pressure and rubber stamping them:
“The Attorney General for the lead Plaintiff State, California, publicly criticized the very behavioral remedies that the parties now ask the Court to approve. But whatever the reasons for the States’ about-face, neither time nor circumstance changes the fact that this merger lessens competition.”
A cornerstone of the settlement is the requirement that the new, bigger Paramount produce 30 traditional big films a year. Though the groups note this is less films in total than the two individual companies had already planned to produce in 2027. Another major condition involves a “CBS and CNN oversight board” staffed by people hand-picked by Paramount executives.
Martínez-Olguín indicates that she’ll take a closer look at the complaints made by Senator Cory Booker in a letter to the court, but isn’t giving a timeline on an expected final ruling:
“In her prefatory remarks, Martínez-Olguín said, “The court isn’t a rubber stamp of your agreement… I have some questions.” The judge said she wanted to “shore up the idea that this is not something that was the result of collusion, but instead was more of an arm’s length process.”
There would have to be something exceptional disclosed for Martínez-Olguín to declare that the settlement doesn’t meet the bare minimum legal standards for “fairness and reasonableness.” It seems unlikely she will block the deal, and Paramount is incentivized to get the final approval signed off before it has to start paying millions in potential “ticking fees” to Warner shareholders starting October 1.
Having covered countless deals like this over the years I can tell you exactly what happens next.
Paramount spends the next 6 months pretending this additional consolidation is driving more competition and innovation to market. With their other hand they start firing thousands of employees. To pay down debt the company will also accelerate already annoying streaming price hikes, cut corners resulting in lower-quality product, and cancel countless promising projects. Larry Ellison will steadily make CNN, like CBS before it, even more friendly to global oligarch and authoritarian interests.
At that point, all the folks who pushed for settlement, including Newsom, will have nothing to say, and will simply pretend none of the obvious negative impacts of consolidation ever happened.