Inside Paramount’s Deal Fine Print — Loopholes and Escape Hatches

If you’re mad about California Attorney General Rob Bonta and 11 other state AGs settling with Paramount to clear the way for the company to acquire Warner Bros. Discovery, wait until you read the fine print.

That promise of 30 films a year between the combined companies? “Half of those have to be at least co-produced by Warnermount,” antitrust expert Matt Stoller tells me. “So they don’t have to make more than 15 or 16 films, and even those, they could just co-produce them. So the actual commitment is fewer films than they make now, for both studios combined. So they committed to make fewer films than they make now.”

And if they don’t reach the 30-movie threshold, and the state AGs take Paramount to court for the violation and win? “They have to pay a fine ($30 million per film), and they may have to sell Miramax,” Matt says — underscoring that the damaged parties, in this case perhaps theater owners, get nothing. “You don’t get damages; you’re done.”

But that’s just one part of the so-called behavioral concessions Paramount agreed to for the next five years as part of its settlement with the AGs — which also include an agreement to establish a board that will attempt to ensure editorial independence of CNN and CBS News and a promise to spend an additional $1.5 billion on film production in the United States.

And yet, even if that looks good on paper — or on a social media quote card, like the one Bonta shared earlier today — Matt argues the enforcement measures are weak. For one thing, as he found, one of the force majeure provisions — which protect the combined company from “acts of God” like an earthquake — includes an economic recession or labor strikes.

“So if they do something that causes a strike or labor disruption of some sort, it says here that’s beyond their control,” Matt says, adding with the lightest amount of sarcasm, “because we know strikes and labor disruptions never happen because of the actions of an employer. And so if they do that, then the agreement goes out the window.”

Matt has been one of the loudest voices against the merger over the last year, and he didn’t hold back during our conversation, calling out several of those complicit in this result — including the Democratic establishment (led by California Gov. Gavin Newsom and Los Angeles Mayor Karen Bass), the unions (including the Directors Guild and IATSE), A-list names like Tom Cruise and James Cameron, and the media — especially Paramount “house media” Puck, the newsletter business.

Of Puck, “It turns out that they were getting huge investment from RedBird Capital, which is also financing the Warner deal,” Matt says, noting the lack of disclosures. “It’s comical, the level of corruption in the media.”

But the anger goes beyond just the settlement, Matt adds. The merger being waved through at this stage, with so many rightfully outraged about the deal’s dangerous outcomes — including mass job loss and reduced competition for consumers — signals rot at the highest levels of leadership.

“Trumpism is not unique to this one guy or to this kind of political order, and it’s not based on bad social attitudes. Both parties do it,” Matt says. “There’s rage across the country right now about exactly this. And it’s not just Hollywood. This kind of betrayal is happening across the board.”

And while Matt wasn’t taking an optimist’s view of the merger, he did express some hope that the fury of the populace could spark something greater.

“The betrayal of people who work for a living is systemic right now,” he says. “We’re seeing a lot of real anger, and we’re gonna have an election in a couple months, and the kinds of candidates who are doing well are not the ones who have more money. So there is a certain sense of deep rage, I think, everywhere. The optimistic scenario is that we’re at a kind of generational turning point in our politics, and people have had it with this shit.”