Paramount + Warner Bros. = Skydance
Paramount completes $111B Warner merger, creating “Skydance” behemoth
Paramount now owns Warner Bros. as last-ditch effort to stop $111B merger fails.
Credit:
Getty Images
Credit:
Getty Images
Paramount Skydance completed its $111 billion merger with Warner Bros. Discovery today, after a last-ditch effort to block the deal was rejected by Supreme Court Justice Elena Kagan.
The post-merger company is called Skydance, taking the name of a firm that Paramount bought in a separate deal last year. The new Skydance combines two of the largest movie studios, streaming services Paramount+ and HBO Max, CBS, CNN, “and a portfolio of live sports including CBS Sports and TNT Sports, as well as a deep programming library and expansive collection of brands and franchises,” Skydance said today in a press release announcing completion of the deal.
The merger was delayed a bit by a lawsuit filed by California and 11 other states. In July, US District Judge Araceli Martínez-Olguín in the Northern District of California ruled that the combination would likely reduce competition substantially and violate antitrust laws.
California settled the lawsuit last month, and the other states involved went along with the compromise. A coalition of free speech and media advocacy groups urged the judge to reject the settlement, saying it will give residents of the states that sued Paramount “virtually nothing.”
Martínez-Olguín approved the settlement on September 30, saying the deal “represents a reasonable factual and legal resolution of the dispute.” She wrote that a typical settlement “does not fully remediate an alleged violation or even necessarily resolve the ultimate factual and legal issues of a case.” It “reflects a compromise of the claims short of full adjudication—compromise that may leave some dissatisfaction for both sides and the public but a compromise that saves the risk, time, and expense of litigating through trial.”
The settlement addresses the lawsuit’s complaints about film distribution “by requiring certain minimum thresholds of investment and release of domestic films,” and addresses complaints about licensing of basic cable channels with “requirements for continued, separate negotiations of distribution for the two entities’ basic cable holdings,” the judge wrote. Objections based on “hopes and desires for the proposed consent decree to reach farther—to achieve more—do not rise to the level of legal violations upon which the Court can reject the parties’ negotiated resolution,” she wrote.
Merger opponents strike out at Supreme Court
A separate lawsuit in the same district court, filed by five consumers who purchase streaming service subscriptions or other video products, also failed. The five consumers sought review in the US Court of Appeals for the Ninth Circuit, which rejected the plaintiffs’ request. The plaintiffs then filed an emergency application to block the deal with Kagan, who handles emergency requests for the Ninth Circuit. Kagan denied the application yesterday without comment.
The settlement with California requires Skydance to set up an “Editorial Independence Board” for CBS News and CNN. The board’s members would be chosen by Skydance and report to the company’s board of directors. The settlement term was adopted amid concerns about CBS and CNN’s ability to report news independently. CNN CEO Mark Thompson and CBS News Editor-in-Chief Bari Weiss will retain their roles in the merged firm.
Paramount CEO David Ellison reportedly told Trump administration officials that he would make big changes at CNN, a frequent target of Trump’s wrath. Last year, Paramount won US approval to buy Skydance after reaching a $16 million settlement with Trump and agreeing to install what Federal Communications Commission Chairman Brendan Carr described as a “bias monitor” at CBS.
The US Department of Justice approved the Paramount/Warner merger in June, a decision that reportedly surprised DOJ staff lawyers who were leaning toward recommending that the agency file an antitrust lawsuit to block it. In September, the FCC allowed Paramount to finance the merger by selling large equity stakes to the sovereign wealth funds of Saudi Arabia, the United Arab Emirates, and Qatar.
Reuters reports that Skydance is “expected to carry about $80 billion in debt, putting pressure on Ellison to grow streaming, preserve cash flow from cable networks and improve theatrical film performance.” The sovereign wealth funds have non-voting shares in Skydance, while the Ellison family and RedBird Capital Partners own 100 percent of the voting shares.
