California Attorney General Rob Bonta finalized a multistate settlement this week with Paramount Skydance, clearing the way for its $111-billion acquisition of Warner Bros. Discovery. The agreement, which aims to address concerns about market control and competition, brings a mixed bag of outcomes for the Golden State, particularly for the Southern California entertainment industry.
The 32-page deal is a result of a historic lawsuit Bonta and 11 other states filed, questioning the reach of corporate power when federal antitrust enforcement is perceived as lacking. George Hay, a professor at Cornell Law School and a former attorney with the U.S. Department of Justice’s Antitrust Division, described the effort as "a fight worth fighting," indicating its importance in asserting state authority on antitrust issues.
The settlement details several requirements for the new Paramount mega-studio over a five-year period. Crucially for Southern California, the company must keep both the Paramount and Warner Bros. studio lots open and operating. This provision is seen as a significant win for Los Angeles, protecting a substantial source of local jobs. Additionally, the company is mandated to release between 30 and 32 films each year, many destined for theaters, along with some independent productions.
Financial commitments are also part of the agreement, requiring the company to spend at least $1.5 billion on production within the U.S. over the five years. This figure would increase if certain uncapped federal or state tax credits become available. Bonta has already stated he intends to make such uncapped credits a priority in the next legislative session, hoping to encourage more production within California, which has seen some filming move out of state in recent years.
While Bonta characterized the settlement as "very good" for California, promising benefits for consumers, prices, jobs, and competition, others offered a more tempered view. William Kovacic, a law professor at George Washington University and former chair of the Federal Trade Commission, called it a "modest win." Kovacic highlighted the institutional victory, noting that the states demonstrated they could assemble a formidable legal team and achieve significant initial success, changing the role of states in future antitrust enforcement.
The path to this settlement was not without political pressure. Paramount Skydance Chief Executive David Ellison had reportedly threatened to move business operations out of California if the lawsuit continued. Governor Gavin Newsom publicly favored a settlement over prolonged litigation, a stance Hay described as a "big blow" to Bonta's legal efforts. Newsom, who has presidential aspirations, likely saw the potential departure of a major studio as a negative for California's economic image.
Despite the external pressures, Bonta maintained that "what you call pressure was just noise to me. I never felt pressured in this process." Ultimately, the settlement represents a compromise, more about what was possible than perfect. However, it showcased the ability of states to challenge powerful corporations and hold them accountable when federal regulation falters, sending a message to other large companies that rules still apply. As Hay noted, Bonta secured the best outcome possible given the circumstances, making it a point of pride for California residents. The focus now shifts to how Bonta’s push for new state tax credits will fare in the upcoming legislative session, a move that could further cement California’s place in the entertainment industry.
