What the paramount warner merger could mean for Hollywood

Ed Butler (0:01)

Could this be showtime for Hollywood's biggest merger?

Rob Bonta (0:04)

With today's settlement, Paramount is required to move production back to the United States by spending at least $300 million more in domestic production, including, of course, in this state.

Ed Butler (0:14)

A compromise in California means Paramount and Warner's could merge.

Ned Thorner (0:18)

One major legacy Hollywood studio is essentially swallowing another one. What's that going to do to the entertainment fabric of the world?

Ed Butler (0:28)

This is World Business Report from the BBC. I'm Ed Butler and today we are picking apart the legal compromise that could unlock a $110 billion merger between two of Hollywood's biggest beasts. But is it a thriller or a tearjerker for the movie loving public? Also to come why Beijing and Washington may not make a deal over AI, and why US flights are in turmoil again.

So, after months and months of legal wrangling could the mega deal be back on? Paramount Skydance, the media giant, has clinched a settlement with states that were suing it in order to block its takeover of Warner Bros Discovery. In doing so, it has now seemingly cleared the path for a $110 billion deal that some could help to reshape the Hollywood studio landscape. In announcing the compromise deal, Rob Bonta, who is the California Attorney General who was bringing some of those lawsuits, he said the deal didn't amount to an endorsement of the future merger itself.

Rob Bonta (1:41)

I want to be clear about something right up front.

This settlement is not a vote of support for this merger. It is not a blessing of the broader merger. Broadly speaking, we believe further consolidation in markets that are central to American economic life.

Ed Butler (2:02)

That is Rob Bonta, the California Attorney General. KJ Matthews is an entertainment journalist joining me from Los Angeles. Hi, KJ.

KJ Matthews (2:11)

Hello.

Ed Butler (2:12)

Do you think, I mean, despite what the Attorney General is saying there, this really is the end of this extraordinarily long saga. We've been talking about this for a while, haven't we?

And that we are going to ultimately see Warner's and Paramount merging.

KJ Matthews (2:28)

Oh, we absolutely are going. I think we're just days away from actually seeing it happen. Now that this, they've reached a legal settlement, Paramount Skydance has reached this legal settlement with the 12 state attorney generals. Remember, it wasn't just California AG Rob Bonta. It was also 11 other state attorney generals with him. Now that they have reached this settlement, that pretty much clears the way for the major obstacle and allows them to do this $110 billion acquisition of Warner Bros Discovery.

I think it's going to happen if we're not days away, we're probably just weeks away from seeing this total takeover. It's really unprecedented because it will now make them the largest TV company really in the world.

Ed Butler (3:14)

Okay, so now just summarize for us what this deal was today. Basically, they negotiated two things, these attorney generals, they said, firstly, you've got to allow editorial independence to CNN and CBS News, which are of course part of the Warner Bros empire. But also, you've got to keep making lots and lots of Californian films.

KJ Matthews (3:40)

Right, it actually did more than that. It's about five different things.

The first thing they agreed to, or Warner Bros, not Warner Bros, but Paramount agreed to, was to spend at least an extra $1.5 billion over five years on US film production. Then they also agreed to release 30 films a year for the next two years and a 32 film a year for the next three years after that. They committed to $47.5 million fund for work-first training and $25 million for independent film fund. It also allows them to negotiate basic cable channels separately from Warner Bros like bundles for five years to keep prices competitive. And the most important thing that a lot of people have been talking about, and you just touched on, it establishes an independent board to protect CBS and CNN from corporate interference.

Ed Butler (4:36)

OK. Well, listen, I want to hear more from you in a second, but let's hear now from Ned Thorne. He's a Los Angeles-based film editor.

He's made films like Rumble Through the Dark. He was the assistant editor on a film recently, Coyote vs Acme. He's now... You told me about, well, firstly, the state of the Hollywood industry at the moment.

Ned Thorner (4:57)

The feel is that we are still in a recovery period from the kind of shock of the 2023 industry strikes. There are a lot of people in my industry, you know, that have not had meaningful work in several years. The knock-on effect of all those strikes and the general kind of downturn and pause in the industry while everybody waited for them to be resolved, I think it was a lot of producers and production companies decided it was a good time to explore more affordable, non-traditional places to base their projects. And so there was a big exodus from Hollywood to places like Georgia.