<p>A federal judge appointed by President Biden examined the proposed merger between Paramount Skydance and Warner Bros. Discovery during a court hearing on Thursday to ensure that the negotiated settlement adheres to federal antitrust law.</p>
<p>The virtual hearing occurred three days after California Attorney General Rob Bonta announced that both parties had reached an agreement to eliminate all remaining legal obstacles to the $111 billion transaction. The deal requires court approval before the merger can proceed.</p>
<p>U.S. District Judge Araceli Martinez-Olguin, presiding over the Northern District of California, posed several questions regarding the consent decree to clarify how the parties came to the agreement earlier that week.</p>
<p>Paula Blizzard, head of the antitrust division of the California Attorney General’s Office, assured the court and the public that the process was fair and that all 12 states participated in the settlement discussions over the weekend. She suggested that the settlement was preferable to fully blocking the merger, which was the goal of the California-led lawsuit.</p>
<p>The consent decree includes five years of remedies aimed at addressing the competitive harms posed by the merger, Blizzard explained.</p>
<p>Among the terms agreed upon by Paramount and Warner Bros. are a joint commitment to release 30 theatrical movies per year for two years, increasing to 32 films per year for three years; a $30 million penalty for each unreleased movie that does not meet the quota; a $1.5 billion investment in production spending in California over the next five years; a fund for independent films; and the establishment of an independent editorial board to oversee both CBS News and CNN.</p>
<p>Control over CNN’s future was not included in the lawsuits filed by the 12 states and the Writers Guild of America. However, Democratic lawmakers and activists have expressed concerns that Paramount CEO David Ellison might change the Warner Bros.-owned news outlet as he did with CBS News. Ellison’s father, Larry Ellison, has connections to former President Donald Trump, who has not been favorably covered by CNN. Critics of the merger worry that Trump could influence CNN’s news coverage through Paramount.</p>
<p>The operational details of the “editorial independence board” remain unclear, and the judge did not focus extensively on that aspect of the consent decree.</p>
<p>Joshua Holian, an antitrust lawyer representing Paramount, supported Blizzard’s position, arguing that the consent decree demonstrates Paramount’s commitment to healthy competition in Hollywood. However, there was a moment of contention between the two lawyers during the hearing.</p>
<p>Blizzard suggested that Paramount pressured California into negotiating a settlement by threatening to leave the state, a point frequently raised by Bonta. Holian directly countered that claim shortly thereafter. Ellison stated on Monday that Paramount’s headquarters will remain in Hollywood for the foreseeable future.</p>
<p>Prior to the hearing, several court filings were submitted. A group of civil rights and religious leaders, along with members of the Block the Merger coalition, filed separate motions to provide amicus briefs opposing the merger. Judge Martinez-Olguin allowed the concerned parties until the end of Thursday to submit their briefs.</p>
<p>Senator Cory Booker (D-NJ) wrote a letter to Martinez-Olguin on Thursday, requesting that the proposed consent decree undergo an independent public-interest review before approval. The judge instructed both defendants and plaintiffs to address the letter by 12 p.m. on Monday. Booker has opposed the merger since its announcement earlier this year.</p>
<p>At the conclusion of the hearing, Blizzard acknowledged the voices opposing the merger but emphasized that the states are focused on enforcing antitrust law. In his statement, Bonta reiterated that he does not align with the critics’ objections.</p>
<p>“Certainly, they can say whatever they want, and if they want to engage directly in the case through appropriate filings, they may do that as well,” he told Politico. “While I respect and understand their perspectives, I do not share them. However, they are welcome to make their position known through appropriate court filings.”</p>
<p>Judge Martinez-Olguin did not provide a specific timeline for a ruling on the settlement. Ellison previously indicated that he anticipates finalizing the transaction in early October, barring any further obstacles.</p>
<p>If the merged Paramount-Warner Bros. entity violates the consent decree, California and the other plaintiffs can bring the case to trial. A trial was previously scheduled for March 2027 before the settlement was reached.</p>