Rob Bonta, California’s attorney general, and his ragtag rebel alliance of unions, concerned celebrities and fellow Democratic state attorneys general were never going to win.
We had to endure months of back-and-forth posturing and some glee over the idea that Paramount Skydance might compromise in a serious way — or even fail — to complete its takeover of Warner Bros. Discovery before an Oct. 1 late-fee deadline. And then it all ended with a friendly entente, a bunch of warmed-over deal points, a performative editorial oversight board and a paternalistic assurance that Paramount loves California after all and has no plans to leave.
It was the threat to leave California that won it in the end. Gov. Gavin Newsom and Karen Bass, the mayor of Los Angeles, took seriously the Paramount Skydance chief executive David Ellison’s threat to leave the state for Nashville. (Reports emerged as recently as last week that the company was looking for space there.) The potential fallout — the permanent loss of up to 60,000 jobs and $21.2 billion in economic output — was just too much to contemplate.
So Mr. Bonta cut a not very good deal, and with it an enervated Hollywood is — for now — spared the worst.
Few people in the film industry not named David Zaslav ever wanted a Paramount-Warner Bros. merger. Combining the two legacy studios and their streamers will reduce competition and, thanks in part to the huge debt load taken on to pay for it, require layoffs.
It’s also part of a larger shift away from the old Hollywood order. Other tech giants — Netflix, Amazon and Apple Studios among them — wield significant clout. But this particular combination, especially because it will include HBO and CNN, provides ready-made cultural (and thus political) power. Mr. Ellison is backed by his tech titan father, the Oracle co-founder Larry Ellison, one the world’s richest men. In the end, the combined entity will be 49.5 percent owned by foreign investors, including Saudi Arabia’s Public Investment Fund, the Qatar Investment Authority and the Abu Dhabi Investment Authority.
These terms, combined with the Ellisons’ friendliness with the Trump administration, have made the traditionally liberal industry players anxious that they will lose influence.
To be fair to Mr. Bonta, Paramount’s threat to leave California was seen as serious, not a bluff, by politicians and union leaders in the state. Every time Mr. Bonta notched a win in his 12-state lawsuit accusing Paramount of breaching antitrust laws, the company countered with a legal maneuver, such as demanding a $1.9 billion bond from the states and the Writers Guild to cover its potential liability.
None of that ever got to court, because the threat of leaving California panicked Mr. Newsom and Ms. Bass. Their apparent lack of support for continuing the fight seems to have forced Mr. Bonta’s hand.
In the end, Mr. Bonta secured nothing structural: He did not force the sale of CNN; no restrictions exist on operating the companies’ movie studios separately, though they need to operate both studio lots; there are no guaranteed protections from job losses.
Mr. Bonta couldn’t shut the merger down, but he did secure some wins: Paramount promised to spend $1.5 billion in U.S.-based production over the next five years. Mr. Ellison committed to releasing 30 films per year for the next two years and 32 per year for the following three years. But he had already more or less agreed to that. What happens after that five-year window closes is unclear.
Paramount’s board of directors will also establish an independent oversight board for CNN and CBS News. It’s not clear how this will work yet, or what “oversight” actually means.
Some critics have been quick to call the agreement worthless. To say this was an underwhelming end to all the Sturm und Drang — the opinion essays, the protests outside the Paramount lot, the rallies with Jane Fonda and Mark Ruffalo, the dire warnings by politicians such as Senator Elizabeth Warren — is a vast understatement.
There’s no sense of triumph or even defeat in Hollywood, merely numb exhaustion. Big changes are coming for the century-old entertainment industry, which until now was never seriously threatened with red-state relocation.
Less than 48 hours before the deal was announced, members of the Hollywood A-list gathered to celebrate the opening of the Lucas Museum of Narrative Art, which looked like a “Star Wars” spacecraft that had docked near Downtown L.A. George Lucas and his wife, Mellody Hobson, were joined by Oprah Winfrey, Nicolas Cage, Eva Longoria, Samuel L. Jackson, Christopher Nolan, Steven Spielberg, and others.
It was a reminder of the film industry at its monocultural zenith: one that could create a shared set of powerful experiences imbued with simple moral purpose. “Star Wars” was about the struggles of the mystical Jedi masters who sought to protect their republic against the Galactic Empire, which was ruled by fear.
Things are not always so clear in real life. In between posing near Luke Skywalker’s landspeeder, all attendees could talk about was the Paramount-Bonta negotiations. When I ran into Mr. Newsom at the party, he told me he’d had an update less than two hours beforehand. Moguls privately shared their views that the deal was basically done and Hollywood would be better off with a resolution rather than prolonging a pointless and expensive battle.
They may as well bow to the inevitable.
Sharon Waxman is the founder, chief executive and editor in chief of The Wrap.
Source photographs by Jae C. Hong/Associated Press and Jeenah Moon/Reuters
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