Paramount CEO David Ellison has succeeded in his quest to acquire Warner Bros Discovery (WBD) after a US federal judge on Wednesday gave the final go-ahead for the $111bn transaction. Minutes later Ellison named former Mattel CEO Ynon Kreiz as co-CEO of the combined company, effective October 5.
Judge Araceli Martínez-Olguín greenlighted the consent decree outlining the terms of the settlement agreed last week by Paramount and 12 US states, calling the decree “a reasonable factual and legal resolution of the dispute”.
Noting that the document follows approvals by regulators around the world, Judge Martínez-Olguín said it was the result of “procedural fairness”. She added that she was satisfied that the decree, which sets out terms for the five years after the merger closes, addressed theatrical and cable sector antitrust concerns raised by the states led by California attorney general Rob Bonta.
Ellison will now race to tie up formalities and minimise the amount of the “ticking fee” the combined company owes WBD shareholders. The fee kicks in on Thursday (October 1) and amounts to approximately $7m a day. The merger is expected to close next week.
Ellison will continue as chairman and CEO and lead strategy, creative and technology, while Kreiz, as co-CEO will oversee day-to-day operations and integration of the combined businesses. The company has said it will make $6bn in savings and Paramount and WBD employees await their fate in the coming weeks.
On Tuesday Cindy Holland, a former advisor to Ellison at Skydance before he merged that company with Paramount last year, stepped down as head of streaming. Hollywood observers speculate the role of streaming head at the combined company will go to HBO and HBO Max Content chairman Casey Bloys.
Ellison has committed that the combined Paramount-WBD will release a minimum of 30 theatrical features in the first two years, rising to 32 in the final three. There are terms regarding a minimum 45-day theatrical exclusivity and a moratorium on PVoD launches until 90 days after the start of the theatrical run.
Furthermore – and of critical interest to the independent community, who are none the wiser as to how this will practically affect their businesses – Ellison agreed the combined company will release a minimum of four independent features each year, and establish an independent acquisitions fund allocating $5m per year for five years.
Paramount and WBD will be required negotiate cable carriage deals separately. Breaches of theatrical release and cable distribution commitments that are not fixed within six months will result in, respectively, divestment of Miramax and a suite of cable channels including BET and Comedy Central.
These are the only examples of structural remedies that Bonta had been pushing for in the months leading up to the settlement, however they are only conditional, raising speculation that he succumbed to political pressure from California and Los Angeles to get the deal over the line, and preclude Ellison from making good on his threats to take Paramount out of the state.
Critics of the decree argue that the absence of immediate structural remedies, which are easier to monitor and enforce, shows the agreement lacks teeth.
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