Paramount and Warner merge to create new media giant Skydance
What's the story
The merger between Paramount and Warner Bros. Discovery has been completed today, creating a new entertainment giant called Skydance. The post-merger company combines some of the biggest names in the industry, including streaming services Paramount+ and HBOMax, CBS, CNN, and a portfolio of live sports including CBS Sports and TNT Sports. The merger was initially delayed due to a lawsuit from California and 11 other states.
Legal resolution
The lawsuit was settled last month
The lawsuit was settled by California last month, with other states involved agreeing to the compromise.
A coalition of free speech and media advocacy groups had urged the judge to reject this settlement, arguing it would provide "virtually nothing" to residents of the suing states.
However, US District Judge Araceli Martinez-Olguin approved the settlement on September 30, calling it a "reasonable factual and legal resolution of the dispute."
Compliance requirements
Settlement addresses concerns over licensing basic cable channels
The settlement addresses complaints about film distribution by mandating minimum investment and release thresholds for domestic films.
It also tackles concerns over licensing basic cable channels with separate negotiation requirements for both entities' holdings.
The judge clarified that objections based on "hopes and desires" do not amount to legal violations that could warrant rejection of the parties' negotiated resolution.
Governance structure
Skydance to establish 'Editorial Independence Board'
The settlement with California also requires Skydance to establish an "Editorial Independence Board" for CBS News and CNN.
Members will be appointed by Skydance and report to its board of directors.
This term was introduced amid concerns over CBS and CNN's independence in news reporting.
Both CNN CEO Mark Thompson and CBS News Editor-in-Chief Bari Weiss will continue in their respective roles at the new company.
Market impact
Skydance is expected to carry around $80 billion in debt
According to Reuters, Skydance is expected to carry around $80 billion in debt. This puts pressure on CEO David Ellison to boost streaming, maintain cash flow from cable networks, and improve theatrical film performance.
The sovereign wealth funds of Saudi Arabia, UAE, and Qatar hold non-voting shares in Skydance while the Ellison family and RedBird Capital Partners control 100% of the voting shares.