Cinema United, the lobbying group representing theater owners across the country, gave its seal of approval to the settlement reached between Paramount and 12 states attorneys general on Monday that paves the way for the company to buy Warner Bros. Discovery.
“For nearly a year, and throughout multiple efforts to acquire the iconic Warner Bros. Studios, Cinema United has remained steadfast in its primary objective to safeguard theatres of all sizes across this great nation and around the world from the harms of legacy studio consolidation,” Cinema United CEO and President Michael O’Leary said in a statement.
“The agreement announced yesterday accomplishes many of exhibition’s objectives. The consent decree includes language on increased film production for five years, meaningful theatrical exclusivity and wide distribution, prohibitions on cost increases, and continued access to the catalogs of Paramount and Warner Bros. While no settlement can eliminate all risk from a merger of this size, these conditions will enable our industry to adapt and succeed in a rapidly changing media environment.”
O’Leary said both the lawsuit and the consent decree “strongly validates that movie theatres are the beating heart of Main Street America and the entire U.S. film industry.”
“Our focus now shifts back to our bright future,” he concluded. “For well over 100 years, global exhibition has worked closely with both Paramount and Warner Bros. to deliver amazing big screen experiences to fans around the world. We look forward to strengthening these historic partnerships to ensure that going to the movies remains the premier entertainment option for generations to come.”
The agreement, which was announced on Monday, includes a minimum investment of at least $300 million annually in domestic TV and film production, or $1.5 billion over five years. Paramount has agreed to produce 30 films per year in the first two years of the deal, which will be upped to 32 per year in each of the following three years. At least four films per year must be independent films and at least 20% must be blockbusters. If Congress passes a federal film tax credit, Paramount agreed that 20% of all film production must be in the U.S. for the first two years of the merger and 30% of the next three.
The combined company must also establish an editorial board to monitor CNN and CBS News’ independence, which will include five established active or retired journalists who have practice journalism for a minimum of 10 years. No more than two members may be affiliated with the same political party and members are expected to serve for three years from the date of their appointment.
Additionally, Paramount and WBD are required to continue negotiating their cable packages separately for five years to preserve competition. It also includes restrictions on changes to affiliate fee negotiations and agreements with distributors and a restriction on the use of confidential information. They must also continue to operate the free, ad-supported streaming service Pluto TV during the commitment period.
The settlement also includes maintaining the studio lots of both companies, honoring collective bargaining agreements and committing $9.5 million each year for five years in workforce training and career development programs in
film and television production communities at qualified educational
institutions and film programs and community arts organizations. Within 30 days of closing, the combined company will also establish a fund for purchasing independent films and make an annual contribution of $5 million.
An independent monitor and a committee of five states will be appointed to ensure the merged company complies with the settlement terms. Failure to comply could result in remedies, including a $30 million penalty for failing to reach the 30 film-per year goal, divestitures of BET, Comedy Central, VH1, Smithsonian, Destination America and Science channel within 120 days and its stake in Miramax within 12 months.
