In a press conference Monday morning, California AG Rob Bonta announced Paramount Skydance has settled its blockbuster antitrust suit brought by a group of Democratic state attorneys general.
As he laid out the details of the settlement, I was proud to see that the structure of the deal tracked pretty closely with much of what I reported over the weekend.
Here are some of highlights (or lowlights) of the settlement:
“For the duration of the Commitment Period, the Combined Entity shall not sell or close the Paramount or Warner Bros. Lots and shall use commercially reasonable efforts to operate the Lots in a manner consistent with past practices, including leasing use to third parties and producing films and television shows.”
And here is what I reported last night:
Both sides seem to generally align on a pledge by Paramount not to sell the Paramount or Warner Bros. lots in the next decade. Although I am told Paramount had suggested inserting the option for one of the lots to be sold before that deadline, if it were sold to a company that intended to continue movie and television production. It’s not clear to me if that suggestion was palatable to the state AGs.
And here is a look at the basic cable commitments:
For the duration of the Commitment Period:
1. In negotiations between the Combined Entity and a Distributor concerning affiliation agreement terms for the Combined Entity’s basic cable network portfolio, the Combined Entity shall separately negotiate affiliation agreement terms for the Paramount Basic Cable Channels and the Warner Bros. Basic Cable Channels. For the avoidance of doubt, this paragraph does not apply to other Combined Entity offerings (e.g., premium cable channels, streaming services, or broadcast).
2. The Combined Entity will not alter the existing schedules for renegotiation of affiliate fee agreements covering basic cable channels, except at the written request of a Distributor, which the Combined Entity will not unreasonably reject or deny.
3. The Combined Entity shall not make any affiliation agreement or its terms for the Warner Bros. Basic Cable channels contingent on the Distributor’s agreement to terms for the affiliation agreement for the Paramount Basic Cable Channels; or vice versa.
In separately negotiating affiliation agreement terms under this Section, the Combined Entity will not use confidential Paramount Basic Cable Channel affiliate fee data in any way to determine, influence, or impact negotiating Warner Bros. Basic Cable Channel affiliate fees, or vice versa.
5. Within 60 days after the Effective Date, the Combined Entity shall implement procedures and protections to ensure that the Combined Entity complies with the requirements of this Section III.B., and will provide those policies and protections to the Monitoring Trustee and the State Committee.
6. This commitment shall not apply where a Distributor affirmatively requests, in writing, that the Combined Entity negotiate basic cable affiliation agreement terms together for the Paramount Basic Cable Channels, Warner Bros. Basic Cable Channels, or any product or service offering from the Combined Entity; provided however, the Combined Entity may not solicit, encourage, or condition other terms on a Distributor making such a request.
7. Divestiture Remedy for Breach. In the event that the Combined Entity materially breaches the cable negotiation provisions in this section:
a. The Combined Entity shall have a cure period of six (6) months from the date the State Committee and the Monitoring Trustee notify the Court that they believe a material violation has occurred (the “Cable Cure Period”) in which to re-negotiate and come into compliance with those provisions. The Combined Entity must make any revised agreements retroactive to the date of the violation and take any other steps necessary such that the Distributor is put in the same position as if the violation had not occurred.
b. If, upon the expiration of the Cable Cure Period, the Court has found that the Combined Entity has violated this Section III.B and has failed to cure said violation as determined by the Court in a final order, the Combined Entity shall, in addition to any remedies necessary to put the Distributor in the same position as if the violation had not occurred, divest its entire direct and indirect ownership interest in the Divestiture Channels.
1. The Combined Entity shall, within one hundred and twenty (120) days after the expiration of the Cable Cure Period, divest the Divestiture Channels to a bona fide divestiture buyer approved by the State Committee (such approval not to be unreasonably withheld or delayed) (a “Divestiture Buyer”) in a manner consistent with this Consent Decree.
The Combined Entity will use their best efforts to divest the Divestiture Channels as expeditiously as possible. In exercising the State Committee approval authority described in this paragraph, in the event that multiple bona fide entities bid to acquire the Divestiture Channels, the Combined Entity presumptively may Case 4:26-cv-07116-AMO Document 244 Filed 09/21/26 Page 9 of 32 10 sell the Divestiture Channels to the highest bidder; however, the State Committee may direct the sale to a Divestiture Bidder that is within five percent (5%) of the highest bidder’s bid price.
And what are the “Divestiture Channels?” The settlement paperwork lists them:
BET (Black Entertainment Television, including BET, BET Gospel, BET Her, BET Hip-Hop, BET Jams, and BET Soul), VH1, Comedy Central, Smithsonian, Destination America, and Science.
It’s notable that the list several so-called “zombie” channels, which haven’t produced any new content in years. So being forced to sell the networks doesn’t seem like much of a penalty.
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There are a couple of other things worth highlighting. While everyone is touting the settlement agreement forces Paramount and WBD to negotiate separately with cable, satellite and streaming Live TV operators during carriage talks, the deal does allow the company to negotiate all of the channels in one package, if the Pay TV company requests it. Which feels like a big loophole.
FWIW, here is how I framed some of these cable TV issues overnight:
The other big structural battle has been over the cable networks. From the beginning of the merger process, David Ellison has said in interviews that combining the cable network assets from both companies would provide “additional leverage” during carriage negotiations with cable and satellite companies as well as streaming Live TV services. And he predicted that increased revenue would allow Paramount to pay down its debt at an accelerated rate.
I was told by multiple sources that state AGs had initially recommended that Paramount divest the Warner Bros. cable nets in order to lessen monopoly concerns. Paramount responded with a proposal that would see the company divesting itself of a cherry-picked list of mostly non-core cable networks, such as TV Land, Comedy Central and Animal Planet.
State AGs noted that wouldn’t substantially ease concerns, given the divestiture would include primarily cable networks that aren’t of primary interest to live TV operators.
What I got wrong was that I didn’t anticipate how easily these concerns would go away for Paramount. I have been told today that a number of state attorneys general were unhappy with the prospect of settling for simply a promise not to use the combined cable channels as a bludgeon in carriage negotiations. But apparently Bonta supported the terms and this was one of the topics where other states felt that they couldn’t fight the battle without California’s help.
And here is a look at the theatrical film commitments:
1. Annual Film Release Commitment.
During each Commitment Year, the Combined Entity shall cause to be released for Theatrical Release in the United States a minimum of thirty (30) Films for the first and second Commitment Years and thirty-two (32) Films for the third, fourth, and fifth Commitment Years (the “Annual Film Release Commitment”).
Of those Films:
a. For the first and second Commitment Years, at least twenty (20) of the thirty (30) Films must be Wide Release Films;
b. For the third, fourth, and fifth Commitment Years, at least twentyone (21) of the thirty-two (32) Films must be Wide Release Films;
c. For each of the Commitment Years, at least four (4) of the Films subject to this Section must be Independent Films; and d. For each of the Commitment Years, at least fifty percent (50%) of the Films subject to this section shall be produced or jointly produced by the Combined Entity.
2. Theatrical-Release Window. For each Film counted toward the Annual Film Release Commitment, the Combined Entity shall maintain a Theatrical-Release Window of not less than forty-five (45) days from the date of initial theatrical exhibition in the United States and shall not market or promote the Film as being available on any PVOD, SVOD, or other streaming platform prior to the thirtieth (30th) day of the Theatrical Release Window.
SVOD Holdback Period.
For each Film counted toward the Annual Film Release Commitment, the Combined Entity shall not make such Film available on any SVOD platform, including Paramount+ or any successor service, for a period of not less than ninety (90) days from the date of the Film’s initial theatrical exhibition in the United States.
4. Marketing Budget Requirement. The Combined Entity shall support each Film counted toward the Annual Film Release Commitment with a marketing spend consistent with typical practice for similar films and release patterns.
5. Tentpole Films Requirement. At least twenty percent (20%) of the Combined Entity’s Films for each Commitment Year shall have aggregate production and acquisition budgets of the equivalent of at least Fifty Million Dollars ($50 million) in September 2026, adjusted for inflation using the CPI-U based on the prior calendar year, and those Films must be released on a minimum of three thousand (3,000) domestic screens within the first four (4) weekends of initial release.
And here is part of what I wrote about the theatrical business:
There has apparently been a lot of discussion over Paramount’s commitment to produce at least 30 theatrical films per year. Bloomberg reported late Sunday night that discussions about that release schedule included a financial penalty for the company missing that 30-film goal.
I'm told that while Paramount is willing to do that, negotiators for the state AGs have expressed concerns that the company would attempt to work around those commitments by filling some of the gap with films not produced by the two studios, or by shifting films originally produced for streaming into its theatrical release schedule. AG negotiators pointed to the recent decision by Paramount Skydance to dissolve its animation output deal with Netflix as an indication of possible future intent by the studio.
And in fact, Paramount did get its workarounds, including the ability to include some independent and licensed films in the 30-film-a-year commitment. And when you parse out all the details in the settlement agreement, Paramount/WBD will be releasing roughly the same number of films it is releasing in 2025 and agreeing to push out the theatrical window and delay the streaming release. That latter fact is much less important than it sounds, because Paramount in particular has proven unable to fully monetize its streaming business with theatrical releases. So delaying the move to streaming comes with very little cost.
And what about CNN? Here is how that issue is handled in the settlement agreement:
News Editorial Independence Board Commitments
1. Formation. Within one hundred eighty (180) days following Closing, the Combined Entity shall establish the News Editorial Independence Board (the “Editorial Independence Board”) and appoint Editorial Independence Board Members in manner that is consistent with this Section III.D. 2. Composition. The Editorial Independence Board shall be made up of five (5) established journalists (active or retired), each of whom shall have practiced journalism for a minimum of ten (10) years (including with credentials for at least three (3) years) (“Journalist”). (“Editorial Independence Board Members”). No more than two (2) Editorial Independence Board Members may be affiliated with the same political party.
3. Appointment. Editorial Independence Board Members shall be appointed by the Combined Entity’s Board of Directors (the “Combined Entity’s Board”).
No member of any government or governmental entity may be appointed to the Editorial Independence Board.
b. No member of any government or governmental entity, including federal, state, and local governments, may approve or have approval rights over members appointed to the Editorial Independence Board. c. No officer, director, shareholder or non-Journalist employee or contractor of the Combined Entity may be appointed to the Editorial Independence Board.
The Editorial Independence Board will have the following responsibilities during the Commitment Period:
a. Establishing a set of guiding editorial principles based on CBS News and CNN’s Standards & Practices policies and principles in effect as of the Effective Date of accuracy, independence, fairness, and journalistic integrity (collectively, “News Editorial Principles”).
b. Resolving any disputes between CBS News employees, CNN employees, and management of the Combined Entity regarding alleged violations of the News Editorial Principles.
c. Resolving any disputes between CBS News employees, CNN employees, and management of the Combined Entity regarding alleged reporting bias or failure to meet agreed reporting fairness standards. d. Establishing and monitoring adherence to ethical journalism as defined by journalism industry best practices and to editorial independence, including from the Combined Entity’s ownership and shareholders.
Scope.
The Editorial Independence Board’s above-described responsibilities are limited to news and editorial content produced principally for distribution in the United States.
One of the first things that jumps out at me is the section limiting the editorial board to content produced for the U.S.
But here was what I reported about the CNN question and while there are a number of additional details in the agreement, the parameters remained the same. An editorial board that doesn’t appear to have much power or ability to push back against political pressure:
From the beginning, the editorial fate of CNN has been a primary topic in the press and inside the news industry, although it really has no impact on any consolidation concerns.
Paramount has focused on CNN’s fate, because doing that allows it to frame opposition to the merger as politically driven, rather than resulting from concerns about media consolidation.
Several sources on both sides told me Paramount negotiators had floated the idea of appointing a management board or some sort of editorial oversight body to ensure the editorial independence of the cable news network.
The state AGs are apparently open to discussing the proposal, although there were concerns the idea would be more of a cosmetic fix than a substantive protection for CNN. And some AGs (including Minnesota AG Keith Ellison) have insisted that CNN must be spun off in order to protect its independence.
This is another issue where I am told by sources that about a half dozen state AGs were unhappy with the editorial board proposal, but didn’t feel capable of bucking California’s decision.
There are a couple of more things worth noting. Paramount agrees to continue operating PlutoTV or a comparable free ad-supported service at its current level. Whatever that means.
And then there was this snippet from last night’s newsletter:
One serious dispute centered around a pledge by Paramount not to move out of Southern California. According to sources on both sides, there were major disagreements on a timeline for the restriction, as well as whether “moving out of California” applied strictly to the production side of the business, which would allow the company to move some of its executives and back-end employees out of state.
This issue wasn’t addressed in the settlement agreement, and when questioned about this during today’s press conference, Bonta admitted there were no restrictions on whether Paramount executives or even large portions of the company’s back-end employees could be moved out of California.
I’m continuing to talk about this settlement today with both sides of the negotiations and will have additional details in the coming days.
And if you want to take a deep dive into the settlement, here is a link to the complete document. As opposed to the weirdly Deadline-watermarked the Penske-owned mags are pointing to today.