The federal judge overseeing the now-settled bid from a dozen states challenging Paramount‘s $110 bid to acquire Warner Bros. Discovery will consider on Thursday whether to dissolve their joint agreement not to close the deal.
The purpose of the hearing is to “address certain outstanding questions regarding the factual and legal underpinnings of the parties’ proposed consent decree” and its implementation, according to a court document filed on Tuesday.
The hearing will follow a landmark settlement struck over the weekend to resolve the lawsuit, clearing the way for Hollywood’s next media and entertainment colossus. The deal doesn’t require any divestitures typical of enforcer-friendly deals. Instead, it appears to be a five-year operating agreement imposed through a consent decree.
Under the settlement, Paramount and Warner Bros. must release at least 30 theatrical films a year for the first two years and 32 for the following three, maintain minimum numbers of wide and independent releases and ensure that at least half of the films are produced or jointly produced by the combined company. Other notable terms: Keeping the studios’ basic-cable negotiations separate and the creation of a five-member independent board overseeing editorial standards at CBS News and CNN (selected by Paramount). A violation of the former term could see an order forcing the studio to divest from BET, VH1 and Comedy Central, among other channels (blue-chip assets like CNN or New Line Cinema are not on the table in these divestiture scenarios).
After the deal was reached, Paramount and California asked the court to enter into the consent decree, which would resolve the lawsuit. They moved for the court to lift an order issued in July barring Paramount from closing the deal.
U.S. District Judge U.S. District Judge Araceli Martinez-Olguin must still approve the agreement.
The court will have continued oversight of the combined company under the five-year consent decree. An independent monitor and small group of state attorneys general will oversee compliance. Paramount is required to provide information and reports necessary to assess whether it’s meeting the settlement’s terms, giving the states some visibility into the studio’s operations.
The arrangement also gives the court a mechanism to intervene if Paramount fails to live up to those commitments. The decree provides for enforcement proceedings and financial penalties for certain violations, with more serious breaches exposing the company to potential divestitures. One example: Violation of the annual film quota could force the studio to sell its stake in Miramax.
The settlement has drawn some criticism for not going far enough to protect CNN’s editorial independence under CEO David Ellison.
“America is free only when the media is competitive, independent, and accountable to the people,” New York mayor Zohran Mamdani said in a statement. “This merger strikes a chilling blow against that freedom — and hands even more power to billionaires like David Ellison to decide what Americans see and hear, all while lifting scrutiny off the federal leaders who pushed it through.”
