Rupert Murdoch, the mogul behind media giant News Corp and Fox News Channel, is known for a singular attitude when it comes to the subject of major deals and business.
Money always wins.
That certainly feels like what’s happened, given news that attorneys general from 12 states led by officials from the Democratic party have settled legal action originally aimed at substantially altering or halting Paramount’s attempt to purchase rival media company Warner Bros Discovery.
California’s Attorney General Rob Bonta, the official who had become the public face of the lawsuit, seemed to struggle in his attempt to put a good face on the agreement announced Monday. Among other things, Paramount pledged $1.5 billion in domestic film production over the next five years, the release of 30 to 32 film projects each year over five years and a new oversight board to monitor how the new company would manage CBS News and CNN.
“I don’t think these two companies should merge,” he said, somewhat plaintively, at his own press conference Monday. So why settle the lawsuit without any of the structural changes or protections for consumers Bonta originally said he wanted?
I haven’t yet delved deeply into this agreement. But the early details leave a troubling sense that Paramount got off lightly.
The big number here was the $1.5 billion of additional spending on domestic film projects Paramount has promised for five years. This is aimed at addressing the primary anxiety California film industry types had about the Paramount WBD merger – cost-cutting by locating more films outside the U.S., reducing even further the jobs local film workers could access.
Bonta’s boss, California Gov. Gavin Newsom, has higher political aspirations, likely. But he can’t build a political base on a bunch of angry, wealthy powerbrokers in the state’s film industry, upset that the AGs’ lawsuit might push Paramount CEO David Ellison into making good on his threat to leave California. So Newsom was an early proponent for a settlement.
(Deadline covered the fight over Paramount’s request for a nearly $1.9 million bond.)
Beginning Oct. 1, Paramount was going to start accruing massive financial penalties for not closing the deal to acquire Warner Bros Discovery and had made noises about asking a court to get the AGs to shoulder some of that burden in the form of a $1.9 billion bond. Especially if they lost the lawsuit, the AGs – and by extension, taxpayers in their states – might have been on the hook for those extra expenses.
Paramount’s promises in this consent decree of a settlement mostly amount to throwing money at the problem. They promise to release 30 movies annually for the first two years and 32 films annually for three years after that. What’s the penalty for failing to meet this benchmark? One punishment is a $30 million penalty per movie – which might be cheaper than making a major film which doesn’t do well at the box office. They might also be forced to sell off the film company Miramax — an outfit which has long been tainted by the crimes of its co-founder, Harvey Weinstein.
Paramount also promised to keep the film studio lots for Warner Bros and Paramount operating separately – good news for California officials hoping to preserve jobs there. As is the promise to pay $9.5 million each year for workforce training and community arts groups. But it’s tough to know how that serves taxpayers in New York, Connecticut or the other states participating in the lawsuit.
(By the way, it was instructive to hear superagent Ari Emanuel interviewed about this deal by my NPR colleague Steve Inskeep, who asked about the loss of press freedoms. Emanuel said, “Move the [expletive] on, because it’s important for Hollywood, my clients to make film and television.” This feels like the similarly short-sighted view of Silicon Valley billionaires, who don’t seem to care if America’s legal and political systems are consumed by chaos as long as their businesses are protected.)
And there’s the question of how a Paramount which has engulfed Warner Bros Discovery will manage what will likely be one of the largest TV news operations on the planet: the combination of CBS News and CNN.
Paramount has agreed to some kind of editorial independence board to help preserve the independence of CBS News and CNN. But given the allegations that Ellison hired CBS News editor in chief Bari Weiss to tame its news content and make it more MAGA-friendly, a board like this – with members chosen by Paramount’s board -- raises more questions than it answers.
Since it reports to a Chief Compliance Officer who will report to Paramount’s board, will this independence board’s work ever become public? If not, what will stop Weiss and other Paramount executives from changing stories and pushing out employees to make both organizations more Trump friendly? Even if the board does manage to curb the efforts to please Trump, how will the public know?
All of this elides a more important point: the 12 state attorneys general should never have had to file this lawsuit in the first place.
The federal government should have judged this purchase according to whether it would be good for the American people and good for the future health of America’s media industry. But I have little faith that is what happened. Instead, the deal was judged by whether the people running Paramount were allies of the current president and would adopt his views on diversity programs and a host of other issues.
We are now in a situation where all the institutions which are supposed to represent the American people have been subverted by wealth, politics and ambition. This combined company will have an estimated $79 billion in debt when the dust settles – and it will mostly have to make up that money by laying people off, reducing expenses and raising prices. All of which hurts average Americans.
Newsom and Bonta may have saved some jobs in Hollywood at the expense of many other people who will face tougher times. To say nothing of what may happen to press freedom in this country, when such a large swath of media is controlled by a CEO who has already shown a willingness to appease an authoritarian President.
Thanks to Newsom, Bonta, Ellison and folks like Emanuel, money wins yet again. While the rest of us lose.