NJ, states settle Paramount antitrust suit, clearing way for merger

New Jersey and 11 other states settled their antitrust lawsuit against the Paramount Skydance Corporation, clearing the way for its merger with Warner Bros. Discovery, state attorneys general announced Monday.

The company agreed to meet annual film release benchmarks and committed to raise spending on domestic movie production by at least $1.5 billion over 2025 levels. The settlement prompted an end to other legal action that could have derailed the $111 billion merger.

“We have been laser-focused on the interests of New Jersey’s working families throughout, and the agreement our multistate coalition obtained here reflects that,” New Jersey Attorney General Jen Davenport said in a statement. “We look forward to generations more of films and TV shows produced right here in the birthplace of the motion picture industry.”

The settlement, which must still win approval from a federal judge, comes only months after the 12 states sued in July, arguing the merger would reduce competition, raise prices, harm movie theaters, and worsen the quality and quantity of the content the firms distributed.

The deal clears the way for the merger of two of the nation’s most storied movie studios and three streaming platforms — HBO Max, Paramount+, and Discovery+ — in addition to other properties.

As part of the agreement, Paramount pledged to continue development efforts for extant projects in New Jersey and agreed to move up to 30% of its film production to the United States for the duration of the five-year agreement if the federal government created a new film tax credit, or 40% if New York or California follow an expanded federal tax credit with their own.

New Jersey offers film tax credits that can cover up to 35% of corporate business and income tax obligations for productions wholly or partially based here.

The combined company will also pay $47.5 million into a training and career development fund for workers displaced by the merger and be required to observe existing collective bargaining agreements with unions and negotiate in good faith.

The settlement calls for the combined company to create a board to oversee editorial independence at CNN and CBS. An independent monitor is to oversee the company’s compliance with the agreement.

CBS News has faced accusations of politicization and editorial interference after Skydance Media acquired Paramount Global last year.

Some celebrated the deal, which will require the firm to release at least 30 movies annually in the agreement’s first two years and at least 32 in the final three years. Each year, at least four of those releases must be independent films, and the merged company must commit $25 million to purchasing such films over the agreement’s life.

“The AG agreement contains important binding and enforceable commitments that protect theatrical film and television markets and domestic film jobs. Equally important, it brings clarity and stability to the industry during a period of decreased production,” said Russell Hollander, national executive director of the Directors Guild of America.

The federal government in June backed the proposed merger.

The Writers Guild of America, which sued to block the merger to prevent harms to its members, also settled its antitrust suit against Paramount Monday, saying it could not pursue the case on its own.

“We continue to believe the merger will cause damage to writers and the industry at large. Now that the Attorneys General have settled with Paramount, however, as a nonprofit, the WGA must contend with the reality of forging ahead alone, with no backing from government enforcers, with a complex antitrust lawsuit that would cost millions of dollars to pursue through trial,” the union said in an unsigned statement to Variety.

The union did not immediately return requests for comment. Its settlement blocks layoffs at CBS News Broadcast for five years and calls for Paramount to pay $17.5 million into the union’s health fund, plus its attorney fees.

Paramount, for its part, has denied the merger would reduce competitiveness in movie production, arguing it needed Warner Bros.’ heft to compete with streaming giants like Netflix and independent distributors like hitmaker A24.

“Bringing Paramount and Warner Bros. Discovery together will build that stronger Hollywood, creating expanded opportunity for our people and even more great entertainment for audiences around the world,” Paramount Skydance CEO David Ellison said in a statement.