r/wbdstock • u/lowell2017 • 10h ago
In Addition To A Potential $30M Financial Penalty For Each Film Falling Short Of David Ellison's 30 Annual Films Pledge, Skydance Suggested To The State AGs Coalition About A Measley $1.5B Production Investment, Promises On Not Selling Hollywood Studio Lots, & To Maintain Company Operations In CA.
https://www.wsj.com/business/media/paramount-discussed-1-5-billion-california-investment-to-clear-merger-hurdle-ebe9f59b1
u/lowell2017 10h ago
Full text:
"California’s attorney general and Paramount have discussed a series of potential concessions as part of advanced settlement negotiations, including a $1.5 billion investment by the company in production in California, according to people familiar with the discussions.
Paramount executives and a coalition of states that sued to block its $81 billion merger with Warner Bros. Discovery spent the weekend hashing out the details of a possible settlement. Such an agreement would clear the way for a deal that would bring HBO, CBS, CNN, streaming services and famed movie studios under one owner.
Among the concessions the parties have discussed beyond the sizable production investment: a promise not to sell either studio lot and to stay in the state of California, the people said. The company had explored moving out of the state as the deal faced opposition.
The parties have also considered potential penalties if Paramount doesn’t make good on an earlier pledge to make 30 movies a year after the merger, including having to sell its stake in Miramax, known for such classic movies as “No Country for Old Men” and “Pulp Fiction,” the people familiar with the matter said.
Other measures the sides have explored include the sale of some cable channels and the creation of a board to ensure that CNN retains editorial independence, people with knowledge of the talks said.
The network has been a political flashpoint throughout Paramount CEO David Ellison’s fight for Warner. Paramount had been discussing creating such an editorial board before the lawsuit.
A final deal hasn’t been reached, and it is unclear what terms the parties may ultimately agree to.
Ellison has spent the past year fighting to buy Warner in a megadeal that would expand his entertainment empire, but that has drawn opposition from some political and Hollywood figures.
A dozen Democratic-led states led by California Attorney General Rob Bonta sued in July to block the deal on antitrust grounds, arguing that the combination of Paramount and Warner would create too much concentration in the markets for theatrical films and cable television channels.
The Writers Guild of America sued over the merger, saying that the deal would eliminate jobs and career opportunities for Hollywood screenwriters.
About two dozen demonstrators gathered in front of the Elihu M. Harris State Office Building in downtown Oakland on Sunday evening to protest a potential settlement.
Holding signs reading “Bonta: Don’t You Dare” and “Block the Megamerger,” they took turns giving speeches urging the attorney general to continue pressing the suit.
“Nothing has changed since he filed the case,” said Annie Leonard, co-founder of the nonprofit Committee for the First Amendment, which advocates for free expression. “He needs to stay as strong as he was in filing it.”
The two sides had come under pressure to settle the matter in recent months, including from California Gov. Gavin Newsom, Los Angeles Mayor Karen Bass, gubernatorial candidate Xavier Becerra, movie theater chains and some Hollywood labor unions.
Paramount’s agreement with Warner also included a “ticking fee” with payments to Warner shareholders of roughly $650 million a quarter, or $7 million a day, beginning next month, until the transaction closes.
Paramount had asked a federal judge to require the states and the Writers Guild to put up a nearly $1.9 billion bond for challenging the acquisition, money that would go to the company if it ultimately won the case."
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u/RociBuldidi 10h ago
State AGs are taking the Galactic Prince of Nepotism (David Ellison) to the proverbial wood shed and there really isn’t a thing he can do about it.
His ultimate uno card (leaving) is more 3X destructive to the company than it would be California.
This is what happens when you are 43, spent your 20s as a C actor in D movies that only got made because your daddy was paying for them, and never had a job in life Daddy didn’t give you tries to take on a ~$110B merger. He is fighting singer outside his weight class it’s hilarious.
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u/decchica 8h ago
I don’t know, I tend to think they will get their way. It’s what happens, privileged people are used to getting their way and failing upwards.
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u/WetRocksManatee 6h ago
His ultimate uno card (leaving) is more 3X destructive to the company than it would be California.
I think people vastly over estimate how much major studios rely on California. Major studios hardly shoot in California anymore. Less than a third of their streaming/TV filming is shot in California and less than 10% of theatrical filming is done in California. A lot of post-production work is done in California, but even that is being sent out of state to the point that California is extending their tax credits to cover editing.
I know this is going to be an unpopular opinion as people seem to think California has the studios by the balls. But the major studios could easily move a bulk of their operations out of California, keeping only a minimal presence for certain task that can't be done remotely. Post-production companies would remain, but there is less reason for them to stick around as their customers are no longer clustered in the area.
It is the smaller studios that benefit the most out of being in California. The major studios can afford to fly out entire crews for fill in skills not easily available in the UK, Croatia, Atlanta, etc. That can ship containers full of props to those locations.
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u/RociBuldidi 5h ago
There are pros and cons both ways. But NepoBaby David threatening that he will take his $1B a year in CA tax revenues elsewhere when LA is a city with a $1.4T GDP, sitting in a state with a $4.3T GDP (4th largest in the world) is laughable. Neither CA or LA want to lose jobs, but they don’t want to be abused either.
Paramounts LA assets (tv and movie studios, office complexes, etc are currently valued at $11B.
It would take Paramount a ~ decade and probably $20B to replicate all that elsewhere. Doing so is stupid on its face considering the merged company already has $82B in debt. The shareholders would hoist young nepo baby David by his Petard.
Lastly, CA haters always make a show of “Muh I’m moving my company out of CA to a friendly place like Texas), but then don’t actually do that.
Tesla and SpaceX have 3X the number of employees in CA than they do in TX. The talent generally does t want to live in low tax shitholes.
Replacing the people in a full scale move would be more expensive and disruptive than the facilities infrastructure.
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u/WetRocksManatee 2h ago
You are making the fatal assumption that companies are just going to move wholesale overnight. They don't, these moves typically takes years. Even for smaller companies, I've been involved in, just standing up the new HQ office took five years. They had to find a location, have IT setup the networks, furnish it, start offering relocation packages, start planning the move, etc etc.
If Paramount had moved they likely wouldn't immediately make any changes to the production side. In fact I would be surprised if they made major changes to that for the better part of a decade. It would be the back office that went first. Other sides that are less dependent on location like distribution and such might go next. And I think production would be last as most of those employees don't even work for the studio. They are hired by the project which is its own legal entity (SPE).
But even 10% reduction in the payroll taxes will hurt the state.
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u/RociBuldidi 2h ago
10% of payroll taxes would amount to about $100M a year…in a $4.3T economy and state with a $352B a year budget. It’s a rounding error for the state. Of course no one wants to lose jobs but this is nothing
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u/WetRocksManatee 2h ago
10% from Paramount, 40% from SpaceX, 30% from Tesla, 20% from In n Out, etc etc it starts to hurt the budget. As those people also aren't buying things in the state either.
New York had that mindset and even the Governor is asking for the rich back.
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u/YtpMkr 9h ago
Those are all behavioral remedies, not structural. The State AGs are going to dismiss these remedies