Free speech and media advocacy groups urged a judge to block a California settlement with Paramount Skydance that would let the company finalize its $111 billion merger with Warner Bros. Discovery.

Twelve states led by California sued to block the deal in July and were able to delay it when US District Judge Araceli Martínez-Olguín ruled that Paramount combining with Warner Bros. would likely reduce competition substantially and violate antitrust laws. Despite that initial victory, California Attorney General Rob Bonta announced a settlement with Paramount earlier this week and the other states involved in the lawsuit signed on to the deal.

Martínez-Olguín must decide whether to approve the settlement. A coalition of free speech and media advocacy groups told the judge in a filing yesterday that the deal will give residents of the states that sued Paramount “virtually nothing.” The filing was submitted by the Committee for the First Amendment, Free Press, Freedom of the Press Foundation, Future Film Coalition, and International Documentary Association.

Bonta “publicly criticized the very behavioral remedies that the parties now ask the Court to approve,” the filing said. That’s a reference to Bonta saying that proposed merger conditions such as Paramount’s pledge to release 30 movies a year are “typically not enforceable in the way that we like,” and “not particularly good at solving the problem.”

The groups said the lawsuit filed by states two months ago alleged that “the tie-up would ‘extinguish competition’ between the two and raise prices, reduce output, lower quality, and lessen choice… But whatever the reasons for the States’ about-face, neither time nor circumstance changes the fact that this merger lessens competition.”

The League of United Latin American Citizens raised similar concerns in its own court filing. The states alleged that the “merger would permanently eliminate competition between Defendants over the films and television programming Americans can watch,” but the settlement “leaves that loss of independent decision-making largely intact,” the filing said.

“The proposed consent decree requires no divestiture as a condition of closing. Instead, it relies on conduct commitments that leave important pleaded harms unaddressed even when the combined company fully complies,” the Latin American group said.

Judge has some questions

At a hearing yesterday in US District Court for the Northern District of California, Martínez-Olguín told lawyers that “the court isn’t a rubber stamp of your agreement… I have some questions,” Variety reported. Martínez-Olguín reportedly said she wants to ensure “that this is not something that was the result of collusion, but instead was more of an arm’s length process.”

Martínez-Olguín asked the parties to submit replies to a letter sent by Sen. Cory Booker (D-N.J.), who said the companies should be required to explain “how each provision remedies each harm alleged in the complaint.” Booker wrote that “the Court should measure the proposed remedies against the relief the States originally sought: an injunction blocking the merger altogether,” and argued that the settlement doesn’t address the lawsuit’s core claims that the merger is anticompetitive and will eliminate jobs.

Judges evaluating settlements generally look at whether a deal resolves the lawsuit’s complaint and whether it was tainted by collusion or corruption. Even if a judge personally does not like a settlement, the judge may still approve it if it meets the minimum legal standards for fairness and reasonableness.

The free speech and media groups’ filing said the deal with Paramount should be rejected “because it is both procedurally and substantively unfair to third parties and the public.” The filing responded to each major provision in the proposed settlement that was submitted for the court’s approval. The film distribution guarantees “appear to lock in fewer films post-closing than the parties are committing to produce in 2027 on their own,” the groups said.

The commitment to release 30 films is lower “than what the companies have together forecasted to investors for 2027 as independent companies,” the filing said. Warner Bros. projected it would release 19 films while Paramount forecast 15 or more, the filing said.

The groups criticized a related condition requiring four independent films each year. The settlement’s definition of “independent film” includes any movie based on an original screenplay even if it is wholly financed, developed, and owned by the studio, the filing said.

Small business owners “get nothing”

If Paramount fails to release enough films, it would be required to divest Miramax Studios and pay $30 million per missed film toward the health and retirement trust funds of various unions and to the National Association of Attorneys General (NAAG) for more antitrust enforcement.

Meanwhile, “small business owners and independent contractors like those that populate the independent and documentary industries—the very groups that would stand to potentially gain from greater production and distribution in competitive markets—get nothing,” the filing by free speech and media groups said.

The settlement requires Paramount to set up an “Editorial Independence Board” for CBS News and CNN. The Editorial Independence Board members would be chosen by Paramount and would report to Paramount’s board of directors, which is chaired by CEO David Ellison.

“To be sure, there are serious questions about editorial independence following reports that the Ellisons offered President Trump what were described as ‘sweeping changes’ and an ‘overhaul’ at CNN in exchange for federal regulatory approval of this merger,” the free speech and media groups said. “But conditioning the States’ approval of the merger on agreeing to create an oversight board on news content is constitutionally fraught.”

The filing said the settlement “memorializes this government intrusion into editorial decisions. Presumably, if the Combined Entity allegedly breaches its vague editorial independence obligations, Plaintiff States may return to the Court to enforce these terms. That would place the Court in the position of superintending content and viewpoint choices by newsrooms with its contempt power.”

Groups: Cable condition won’t prevent higher prices

The settlement requires the post-merger entity to conduct separate negotiations for the licensing of basic cable channels owned by Paramount and Warner Bros. Bonta’s office said the condition, which lasts for five years, would “preserv[e] the existing competitive dynamic between the companies” and help “keep prices down for consumers.” This provision does not apply to premium cable channels, streaming services, and broadcast content.

The free speech and media groups’ filing said this means “the Combined Entity still would be free to use its power in other offerings—a combined HBO and Showtime (premium cable channels), a combined HBO Max and Paramount Plus (streaming services), and CBS (broadcast)—to extract higher prices in basic cable negotiations, as this form of leveraging is carved out.” The negotiation provision also doesn’t resolve the states’ allegation that combining the companies’ cable portfolios would lead to reduced investment in basic cable channels, the filing said.

Bonta defended the settlement by saying it will guarantee “massive investment in domestic film production and provid[e] enforceable guardrails to help keep cable prices competitive.” He said the deal “is not a vote of support for this merger. But we believe this settlement, which resolves our antitrust concerns in every market alleged in our case, protects competition and consumer choice, and puts workers’ needs, concerns, and futures first, is the best course of action.”

The Writers Guild of America reluctantly settled its own lawsuit against the merger after learning of the agreement with California. The Writers Guild said its settlement prohibits writer layoffs in the CBS News broadcast division for five years and requires $17.5 million in payments to the group’s health fund.

“We continue to believe the merger will cause damage to writers and the industry at large,” the Writers Guild said. “Now that the attorneys general have settled with Paramount, however, as a nonprofit, the WGA must contend with the reality of forging ahead alone, with no backing from government enforcers, with a complex antitrust lawsuit that would cost millions of dollars to pursue through trial.”

A Bloomberg article said the Paramount/California deal was initially opposed by Massachusetts, New York, Connecticut, and Minnesota. But attorneys general in those states reportedly “concluded the expense of the legal battle was not justifiable without California at the helm.”