California Attorney General Rob Bonta has settled the challenge that he brought with 11 other state AGs to the merger between Paramount and Warner Bros. The deal to settle the suit is both improbable and outrageous.
The $81 billion merger will give the Ellison family control of two of America’s biggest media companies, rolled into one behemoth combining film, television, sports, entertainment, and news. It would slash jobs and reduce competition throughout several industries. David Ellison has already destroyed the independence of CBS News. This would allow him to destroy CNN as well.
As an indication of the strength of Bonta’s case, on July 20, U.S. District Court Judge Araceli Martínez-Olguín issued a temporary restraining order against the merger that rejected many of Paramount’s arguments, and scheduled a trial for next March. At that point, the Ellisons began applying political pressure for a settlement and threatening that Paramount would leave California if the suit succeeded.
In late August, Bonta canceled a scheduled meeting with representatives of Paramount after leaks of supposed settlement talks began appearing in the media, accusing Paramount of bad-faith tactics.
The tactics never changed. Paramount, Bonta, and other AGs spent the weekend in “advanced settlement talks” in which Paramount would stay in California, agree to 30 film releases per year among the two studios under threat of divesting some production companies if they don’t, invest $1.5 billion, and add an editorial board to allow for independence at CNN and CBS. The leaks of the deal very likely came from Paramount.
While asset sell-offs were initially under Paramount’s consideration, other reporting has indicated that Bonta soured on this, citing Paramount’s shaky finances. This is particularly ridiculous, because given the state of the cable industry any company with the least bit of sense should be wanting to spin off their zombie cable networks, as Comcast Universal has and as Warner Bros. was about to do before this merger.
Behavioral remedies like promises of film releases are simply unenforceable, and editorial panels for CNN and CBS are similarly dubious and have nothing to do with the core of the case, which alleged that a combined company would have too much power over theater owners and cable companies to set contract terms.
Yet Bonta caved under pressure, after being abandoned by every major politician in California (from current Gov. Gavin Newsom to heir apparent Xavier Becerra to Los Angeles Mayor Karen Bass), all of whom are worried about jobs in the event of a Paramount exit. But Paramount’s stated plan post-merger includes $8 billion in “savings,” which translates into the loss of tens of thousands of jobs.
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Over the weekend, some reporting suggested that Connecticut, New York, and other states were asking for more concessions. But they ultimately fell in line with Bonta.
The thousands of film and television professionals who put themselves on the line to oppose the merger of two major studios in their industry demanded that Bonta work in their interest, to no avail. Paramount was desperate to settle before October 1, when Paramount must start paying a $7 million-per-day “ticking fee” to Warner Bros. shareholders.
The lawsuit was exceptionally strong on the merits, a textbook case of why we have antitrust laws. It is monumentally disappointing that Bonta caved, especially because we don’t have any other lines of defense to the Trump administration’s antitrust corruption. Every company looking to merge is getting a signal that they can bully their way through to extreme concentration. That is terrible for the economy.
