In this week’s column, California Sports Lawyer® CEO and Managing Attorney Jeremy M. Evans examines whether California’s challenge to the Paramount Skydance–Warner Bros. Discovery merger secured enough for Hollywood to justify the delay.
It may have been better to usher the deal through sooner while securing deal points that benefit the state and its residents.
You can read the full column below. (Past columns can be found, here).
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A federal judge’s approval of the settlement on September 30, 2026, has cleared the way for Paramount Skydance and Warner Bros. Discovery to complete their merger. A previous column examined the business case for combining the companies, while another questioned California’s resistance in a changing media market. The September 30 approval brings a more immediate question: were the commitments California secured for Hollywood worth the delay, or could they have been negotiated sooner?
First, we must remember that jobs at any particular company are not guaranteed and companies are not products or services of the state, government, or political officials. Directors and officers of public companies owe fiduciary duties to their corporations and shareholders, and all employers must follow labor and other laws. Otherwise, these are free enterprises. Where antitrust is concerned, governments can challenge a merger that may substantially lessen competition. Companies are otherwise free to move and change their structures as they see fit. This is why states that do very well financially have welcomed business as opposed to forcing companies to leave through high taxes and overregulation.
Second, the federal government allowed the Disney-Fox deal to proceed in 2018, but only after challenging it and requiring divestitures. Disney’s $71.3 billion acquisition of Fox assets required the sale of 22 regional sports networks, while Paramount’s deal values Warner Bros. Discovery at $110 billion. Although the Paramount-Warner Bros. Discovery price tag is larger, the combined business is smaller by revenue: $66.1 billion for 2025 compared with approximately $81.5 billion for Disney-Fox in 2018. The regional sports networks accounted for only $4.3 billion of the Disney-Fox figure, leaving $77.2 billion after their removal. Adjusted for inflation, the full Disney-Fox figure is approximately $104.5 billion in 2025 dollars, nearly $40 billion more than Paramount and Warner Bros. Discovery combined. Disney itself reported $94.4 billion in 2025 revenue. The figures measure overall company size rather than competition in each market, but deal value and the size of the resulting company are different questions. Paramount and Warner Bros. Discovery also do not combine competing regional sports networks as Disney and Fox would have. Both deals reflect the same changing dynamic. Netflix, Disney, and Amazon are formidable competitors in streaming. Paramount+ and HBO Max together would have a better chance to compete at scale. In many ways, the combination of Paramount and Warner Bros. Discovery reorders the power structure and allows two legacy companies to compete on a grander scale once again.
Third, the opposition endeavor caused delay and uncertainty even though the case ultimately settled. The federal court’s July 20 ruling found serious antitrust questions at the temporary restraining order stage, including the companies’ projected 27% combined share of wide-release theatrical distribution. That was an interim finding, not a final ruling that the merger was unlawful. By comparison, a Writers Guild submission to the Justice Department put Disney and Fox at 22% and 13% of U.S. and Canadian box-office receipts in 2017, or 35% combined. The 2017 box-office figure and the projected 2026 wide-release distribution figure measure different things, but theatrical concentration was a concern in both deals. The federal remedy in Disney-Fox focused on 22 regional sports networks. Litigation also has costs, although the settlement’s cap of $40 million on reimbursement of the 12 states’ legal and expert expenses does not tell us what taxpayers actually spent. Knowing the history of the Disney-Fox merger and the current political climate, the Attorney General might have been better off negotiating deal points that benefit California residents sooner, instead of fighting to stop a deal that ultimately went forward.
Fourth, there is serious debate around whether the delay actually helped deliver deal points for the State of California, its residents, or the State’s coffers. The Disney-Fox settlement required the sale of 22 regional sports networks. Here, Skydance had already announced plans for at least 30 theatrical films a year, a 45-day theatrical window, and continued investment in both studios. Still, the court-approved settlement goes slightly further: it requires two (2) more films a year (32 total) in years three through five, at least $1.5 billion in additional U.S. production over five years compared with the companies’ combined 2025 spending, $47.5 million for workforce training and arts programs, and $25 million for an independent film fund. It also requires the company to keep the Paramount and Warner studio lots open and provides for monitoring and penalties. The public record does not establish whether the company would have taken the same actions voluntarily, or whether these terms could have been negotiated sooner. That is the question when deciding whether the delay was worthwhile.
In the end, states must stay competitive to attract business. Utopia does not exist on earth and, if it did, it would not exist in a vacuum. Jobs and enterprise are not guaranteed. A person can lose a job as quickly as a company leaves. Under the settlement, Skydance has agreed not to close or sell the Paramount and Warner Bros. California studio lots during the five-year commitment period, but arguably the state has weakened its efforts to fight for business and is instead focused on fighting companies that do not capitulate to high taxes and overregulation. California has already lost ground: IRS migration data show a net $11.9 billion in annual adjusted gross income associated with residents who moved between 2022 and 2023, while the California Film Commission estimates $1.6 billion in potential production spending was lost to other locations from 2020 to 2024. Tesla moved its corporate headquarters to Texas, and In-N-Out committed $125.5 million to a Tennessee regional office, although both companies continue to operate in California. The record does not show that a prolonged challenge was necessary to keep these studios in California. It may have been better to usher the deal through sooner while securing deal points that benefit the state and its residents.
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About Jeremy M. Evans:
Jeremy M. Evans is the CEO and Managing Attorney at California Sports Lawyer®, representing companies, creators, and talent in dealmaking matters across entertainment, media, sports, and intellectual property. An award-winning attorney and industry leader, Evans is based in Los Angeles and Newport Beach, California. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.
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