By Jody Godoy and Chris Sanders
WASHINGTON, Sept 21 (Reuters) - Critics swiftly decried a California-driven settlement with Paramount Skydance that cleared the way for its $110 billion acquisition of Warner Bros Discovery, saying it will hurt competition in Hollywood, failed to protect jobs and lacks substantial concessions from the media conglomerate.
Opponents of the merger accused California Attorney General Rob Bonta and Governor Gavin Newsom of caving to wealthy interests, particularly Paramount
CEO David Ellison, after Paramount threatened to leave the state if the lawsuit was not dropped.
"Today, billionaires have yet again bribed, censored, and bullied their way to the top," said Alvaro Bedoya, a former member of the US Federal Trade Commission and adviser at the American Economic Liberties Project. "Layoffs will follow. People from L.A. to Atlanta will lose their jobs, small businesses will lose their contracts, your cable bill and movie ticket will be even more expensive."
Disappointment with the settlement rippled beyond Hollywood, illustrating a growing split in the Democratic Party between moderates, who are more business-friendly, and progressives, who seek a harder line to deliver affordability for US consumers.
US Senator Elizabeth Warren, a Democrat from Massachusetts, criticized the deal, and said Paramount is a "clear candidate for antitrust scrutiny in a future pro-competition administration."
"This settlement greenlights an anti-monopoly disaster that will result in higher prices and fewer jobs, and enables a handful of billionaires to call the shots in the American media," she said.
'NOT A VOTE OF SUPPORT'
Bonta, in a press conference on Monday, said the settlement is "not a vote of support" of the acquisition, because "it does not serve competition well." But he also argued it would amount to more production in California.
Ellison said on Monday that the deal will strengthen competition and benefit consumers and workers.
Spokespeople for Paramount and Bonta did not immediately respond to requests for comment on the reaction by critics of the deal.
Bonta had said from the outset that structural remedies, where a company sells off part of its business, are superior to promises to change or uphold business practices.
Yet the settlement does not require Paramount to sell off any cable channels, or any component of what Bonta said made Paramount and Warner such a formidable combo in theatrical film distribution, such as its lucrative intellectual property.
Paramount owns name-brand franchises including "Top Gun", "Mission: Impossible", and Star Trek, while Warner Bros holds the rights to Batman, Harry Potter, and "Lord of the Rings".
The settlement includes the creation of independent editorial boards for CNN and CBS, and a $30 million penalty per film for any shortfall against Paramount's pledge to release 30 movies annually, as well as a commitment to bargain separately with television distributors. The commitments are temporary, however, and expire within three to five years.
Ensuring the merger would not harm the US entertainment industry by reducing the number of theatrical and television productions was a top priority for many after the lawsuit was filed in July. Consolidation as well as cheaper alternative production locations have led to job losses in Hollywood.
John Bergmayer, legal director at Public Knowledge, said the merger "leaves fewer studios competing for scripts and talent, gives one company greater power to dictate terms to distributors, and reduces streaming choices. Consumers will face higher prices, while writers and other creative workers will have fewer employers bidding for their work."
Bonta's bid to block the deal had its detractors, too. Iowa and Montana asked the US Supreme Court to step in and block the case, in a bid to protect the deal.
Cinema United, a trade organization representing theater owners, had urged Bonta to discuss a settlement with Paramount, in hopes of avoiding further uncertainty and disruption in the industry. Cinemark, AMC and Regal are part of the group, which represents 30,000 US movie screens.
(Reporting by Chris Sanders in Washington and Jody Godoy in Austin, Texas; Editing by Bill Berkrot)
