Hollywood Labor Is Writing the Paramount-Warner Merger Contract

The DGA and IATSE have asked California Attorney General Rob Bonta and Paramount CEO David Ellison to settle the antitrust case blocking Paramount’s $110 billion acquisition of WBD.

The unions represent nearly 200,000 directors, technicians, artists and crew members. They’re offering their support for the merger in exchange for nine binding conditions covering production volume, theatrical windows, third-party licensing, domestic production, HBO distribution and Paramount’s Los Angeles headquarters.

The proposed settlement would reach directly into how the combined company develops, finances, releases, licenses and distributes programming.

Labor Wants a Floor Under Production

The DGA and IATSE say global film and TV production has fallen between 35% and 40%, with a steeper decline in California. Merger uncertainty has added to the slowdown as projects are delayed or canceled ahead of a trial currently scheduled for March 2027.

Their proposed conditions would require Paramount and Warner Bros. to remain separate film studios, each with its own production, distribution, marketing and exhibition operations. Each studio would release at least 15 theatrical films annually.

Ellison has already offered theater owners legally enforceable three-year commitments covering 30 combined releases. Paramount’s 30-film pledge secures theatrical volume while leaving audience demand unresolved. The unions want that output floor incorporated into the agreement resolving the antitrust case.

Each theatrical release would receive at least 45 days of exclusivity before becoming available through premium transactional platforms. The unions prefer a minimum of 60 days. Paramount+ and HBO Max would have to wait at least 120 days before adding the films to their subscription catalogs.

Those windows would create a more predictable production and release schedule for workers and theaters. They would also limit Paramount’s ability to accelerate a movie onto streaming when box office performance disappoints or subscriber acquisition becomes a higher priority.

The Conditions Run Through the Content Supply Chain

Paramount and Warner Bros. would also maintain separate TV studios.

Each studio would have to continue licensing theatrical films and original programming from third parties based on its five-year historical average, excluding the disrupted production years of 2020 and 2023. The combined company would remain an active seller of programming to outside buyers.

A company controlling Paramount, Warner Bros., CBS, HBO, Paramount+, HBO Max and a large cable portfolio can supply more of its own programming across its channels and services. That reduces the number of available buyers for independent studios and gives the combined company more opportunities to keep rights inside its own distribution system.

The licensing requirements are designed to preserve some of the economic activity that consolidation would otherwise pull in-house. Independent producers would retain access to two major studio buyers, while competing networks and streaming services would continue receiving programming from Paramount and Warner Bros.

The unions also want HBO maintained as a linear premium channel available through pay-TV operators and third-party platforms including Amazon. Paramount couldn’t use the merger to move HBO entirely inside an owned streaming bundle.

Domestic production would receive its own protection. Paramount would have to maintain the percentage of film and TV production completed in the United States based on the previous five-year average, again excluding 2020 and 2023. The company would also keep its headquarters in Los Angeles.

Corporate Control Sits Above the Studio Guarantees

Separate Paramount and Warner Bros. operations would preserve two production organizations, two release slates and two licensing businesses. Both studios would answer to the same parent company.

That parent would allocate capital, approve major productions, control franchise strategy and decide where programming appears across theatrical, linear TV and streaming. It would also negotiate companywide technology, advertising and distribution agreements.

Separate studio labels can compete for internal investment. They don’t recreate the external competition that exists when two companies have independent budgets, management teams and shareholders.

The proposed licensing requirements would preserve part of that external market by forcing the company to continue buying and selling programming outside its own portfolio. Their effectiveness will depend on how the settlement measures compliance.

A historical licensing percentage could be calculated using title count, programming hours, production spending or total licensing expense. Each method creates a different obligation. A company could satisfy a title-count requirement with smaller productions while concentrating more of its budget on internally owned franchises.

Domestic production requirements carry the same risk. Paramount could maintain the percentage of projects made in the United States while reducing overall production volume or moving its largest productions abroad.

The settlement would need clear definitions, regular disclosures, independent audit rights and financial penalties. Without them, the conditions could be met on paper while the underlying market continues to contract.

The Debt Will Keep Looking for Synergies

Paramount expects the combined company to carry approximately $79 billion in debt. Ellison has identified $6 billion in potential synergies.

Paramount’s $6 billion synergy plan is landing in a media labor market already under sustained pressure. The merger combines overlapping studio operations, marketing teams, distribution groups, streaming platforms and corporate functions.

The unions’ conditions would protect several of the areas where Paramount could otherwise pursue savings. Separate marketing and distribution operations cost more than a unified organization. Minimum film commitments require continued production spending. Third-party licensing directs money outside the company. Longer theatrical windows reduce release flexibility.

The Wall Street Overlords will expect the $6 billion to show up on schedule, regardless of how many operations the settlement protects.

Paramount can accept restrictions to get the transaction closed. The real pressure arrives during integration, when debt payments, declining linear revenue and streaming investment compete with the production and licensing commitments made to secure approval.

Any settlement will need protections that remain enforceable after the merger closes and the political attention moves elsewhere.

Hollywood Labor Is Split Over the Cost of Delay

The WGA is pursuing its own lawsuit to block the merger, arguing that the combination would eliminate a major buyer of film and TV projects, reduce demand for writers and weaken compensation.

The DGA and IATSE share the concerns around consolidation. Their proposed settlement reflects the immediate damage caused by a production market already operating well below historical levels.

The unions are choosing different responses to the same contraction. The WGA wants to preserve two independent employers. The DGA and IATSE want enforceable production commitments from the combined company.

Ellison has been building support among the groups with the most exposure to continued delays. Theater owners have received output guarantees. The DGA and IATSE have proposed protections for production, licensing and domestic employment.

David Ellison has threatened to take Paramount’s operations out of California as he pressures state officials to resolve the case. Moving productions and corporate functions would deepen the employment losses Bonta is being asked to prevent.

Every new commitment gives California another potential remedy short of continuing the lawsuit through trial. It also leaves the state responsible for monitoring a complicated operating agreement across two studios, multiple streaming services, theatrical distribution and third-party licensing.

The Streaming Wars Take

The DGA and IATSE have given Paramount a framework for closing the WBD acquisition while presenting the merger as a source of production stability.

The nine conditions would establish minimum film output, protect theatrical windows, preserve third-party licensing, maintain domestic production and keep HBO available through outside distributors. They would also make the combined company more expensive to operate as it attempts to deliver $6 billion in synergies and service approximately $79 billion in debt.

The value of the settlement will come down to measurement and enforcement. Paramount can comply with a film-count requirement by adjusting budgets. It can maintain a domestic production percentage while reducing total output. It can meet a licensing target through smaller titles that preserve the number without preserving the spending.

Bonta would need reporting requirements, audit rights and penalties capable of surviving years of integration and cost cutting.

Labor has written the operating terms. California now has to decide whether it can enforce them.