The dispute over Paramount Skydance’s planned takeover of Warner Bros. Discovery continues to escalate. Whilst the twelve US states bringing the lawsuit, led by California’s Attorney General Rob Bonta, continue to challenge the transaction, pressure is mounting within the US film industry on those involved to find an out-of-court settlement. At the same time, the differing positions of the trade unions and cinema operators highlight just how divided the industry has become.
The DGA and I.A.T.S.E. are pushing for an agreement
A joint initiative by the Directors Guild of America (DGA) and the stage workers’ union I.A.T.S.E. is bringing fresh momentum to the situation. The two unions are calling on Bonta and Paramount CEO David Ellison to seek an out-of-court settlement or, at the very least, to begin negotiations much sooner. They cite the ongoing uncertainty for employees and companies as the main reason for this.
At the same time, the trade unions emphasise that they are fundamentally critical of mergers of this kind. However, they argue that the current situation is placing an additional strain on an already struggling film and television industry. According to the DGA and I.A.T.S.E., global film and television production has declined significantly, whilst productions are being postponed or cancelled.
However, the trade unions are not calling for unconditional approval of the merger. Instead, they are proposing a comprehensive list of legally binding and enforceable commitments. These include, amongst other things, ensuring that Paramount and Warner remain separate studios with their own production, distribution and marketing structures.
In addition, both studios are to produce and distribute at least 15 feature films each per year. These films are to be subject to an exclusive cinema window of at least 45 days – preferably 60 days or longer – before being released via PVoD. There must be a minimum of 120 days before the SVoD release. Further demands relate to production in the US, the licensing of content and the retention of Paramount’s headquarters in Los Angeles.
Cinema operators are calling for a swift resolution
This means that the DGA and I.A.T.S.E. find themselves caught between the positions of various other industry stakeholders. Major US cinema chains such as Regal and AMC have spoken out in favour of the takeover being finalised as quickly as possible.
According to reports, Paramount has offered agreements for at least 30 cinema releases per year, as well as minimum timeframes for cinema distribution. The plans include an exclusive cinema window of at least 45 days and a minimum of 90 days before the content becomes available for streaming.
The demands made by the DGA and I.A.T.S.E. go further in some respects: they are calling not only for a specific number of cinema releases, but, in particular, for the two studios to be maintained as separate entities and for longer terms of protection for exploitation rights.
WGA stands by its rejection of the merger
The Writers Guild of America (WGA) takes a fundamentally different stance. The writers’ union continues to support the legal action against the takeover and is calling for the transaction to be blocked.
This highlights the divide within the US film industry: whilst some cinema operators favour a swift resolution and the DGA and I.A.T.S.E. are pushing for an agreement with binding safeguards, the WGA continues to reject the merger on principle.
Bonta rejects any suggestion of compromise
There is as yet no sign that the plaintiff states are willing to reach a swift settlement. Bonta has publicly and strongly rejected Paramount’s arguments. In his view, the proceedings are not about individual promises made by the company, but about the long-term structural consequences of a merger for competition.
The twelve states argue that the merger would lead to significant market concentration in cinema film distribution, blockbuster films and cable television. The lawsuit against the takeover, valued at around 110 billion dollars, was filed in July.
Paramount is stepping up the pressure on California
At the same time, Paramount is taking a tougher line. According to reports in Puck, Variety and Deadline, David Ellison is said to have told his senior executives that Paramount could leave California if Bonta does not enter into negotiations to reach an agreement.
1 October has been cited as a possible date for the start of such a withdrawal. Tennessee, Texas and Georgia are among the possible new locations mentioned. Ellison is said to be considering a phased move over several years.
An actual relocation would have a significant impact on the Californian film industry. Paramount is one of Hollywood’s most historic studios. At the same time, such a move would further exacerbate the already tense situation for employees and production service providers.
The decision remains open
This means that several interests are currently at odds with one another. Paramount wants to finalise the merger as quickly as possible and points to commitments made to cinemas and potential safeguards. Major cinema operators support a swift conclusion. The DGA and I.A.T.S.E. also want a quick resolution, but are demanding extensive, legally binding commitments in return.
The WGA and the twelve states bringing the action, however, remain fundamentally sceptical. It remains to be seen whether the differing demands can be reconciled in a compromise.
The outcome of the proceedings is of considerable significance to the international film industry. The decision could not only alter the ownership structure of two major Hollywood companies, but also redefine issues relating to theatrical release windows, production volumes, employment and concentration within the international film and television industry.