Official announcement of the establishment of Sky Dance Group (01:55)
The much-watched Paramount acquisition of Warner Bros. Discovery experienced a key turning point at the end of September after encountering major changes in August. On September 30, the antitrust lawsuit involved in the acquisition was settled, which meant that the final obstacle was cleared. On October 2, Paramount Skydance CEO David Ellison announced that after the merger of Paramount and Warner, the new parent company will be called Skydance Group, and the two Hollywood companies with more than a century of history will operate as its subsidiaries.
Paramount threatens to move, turning the tide in one fell swoop
Originally, the U.S. Department of Justice had approved the acquisition in June, and nearly 70 regulatory agencies from the United States and overseas had also approved the acquisition. However, under the leadership of private antitrust expert “Hulk” Mark Ruffalo, 12 U.S. Democratic state attorneys general, led by California Attorney General Rob Bonta, jointly launched an antitrust lawsuit in July with the Writers Guild of America. In August, the case was approved by Federal Judge Araceli Martínez-Olguin of the Northern District of California and scheduled for trial in March next year. David Ellison, who had hoped to complete the acquisition on time before October 1 this year, was furious.
In just a few years, David Ellison acquired two Hollywood film companies with over a century of history.
Among other things, according to the agreement, after September 30, Paramount will pay a daily delay penalty of US$7 million to Warner shareholders. When I wake up every day, I see that 7 million US dollars have been wasted without doing anything. Even the son of Larry Ellison, the CEO of the extremely wealthy technology company Oracle, will feel extremely heartbroken.
However, it turns out that David Ellison’s negotiating skills and ambition cannot be ignored. In mid-September, he suddenly used his trump card and threatened to move Paramount’s headquarters out of Hollywood. For California, which relies heavily on the film and television production industry, this move is like a thunder on the ground. If Paramount were to be lost, it would mean the loss of a lot of jobs and a huge amount of tax revenue. Soon, Los Angeles Mayor Karen Bass, who was preparing to run for re-election, changed her earlier attitude of clearly opposing Ramon’s acquisition of Warner, and quickly expressed goodwill, hoping to retain this Hollywood ace company and continue to stay in the city. In addition, California’s current governor Gavin Newsom, who is rumored to be likely to challenge the U.S. president in 2028, and former U.S. Health Secretary Javier Becerra, who plans to run for the next California governorship, have publicly expressed concern about the matter and hope that both parties can achieve a good outcome.
According to opponents of the acquisition, the merger of Paramount and Warner will inevitably lead to a large number of layoffs, and this has become one of their main arguments against the acquisition. Now, Paramount simply resorted to the big move to withdraw from the factory. Some research reports show that the number of unemployed people caused by their departure from California is much greater than the number of people who may be laid off after the acquisition of Warner.
So, it’s the lesser of two evils. As expected, California Attorney General Rob Bonta softened and stated that the lawsuit does not necessarily have to be delayed until March next year, but that peace talks can be sat down now. After a week-long tug-of-war, the two sides announced a settlement on September 21. The governors reported to Judge Araceli Martinez-Holguin in the hope that the antitrust lawsuit, originally scheduled for March next year, could be dismissed.
Although Paramount successfully persuaded the Democratic attorneys general (in fact, the four attorneys general from Minnesota, New York, Connecticut, and Washington State did not originally agree to compromise, and they even wanted to fall out with Bonta, but only gave up at the last moment because of the mediation of Newsom and other Democratic Party bosses) and appeased the Writers Guild of America, but the private antitrust people led by Mark Ruffalo are still unwilling to give up.
Mark Ruffalo is the most active opponent of the acquisition.
The “Stop Merger” coalition they formed soon sent a letter to Judge Araceli Martinez-Holguin, demanding that the settlement agreement between Paramount and the attorneys general be declared invalid because it lacked sufficient binding force. In addition to “The Incredible Hulk”, members of the alliance also include “Old White” Bryan Cranston, Jane Fonda, Denis Villeneuve and Sofia Coppola.
As early as the last moment of the negotiations between the two parties, Mark Ruffalo publicly appealed to Bonta on social media not to compromise. “5,670 filmmakers, risking their careers to get you to fight this merger, came forward to sign a joint letter. In just three weeks, more than 75,000 people (and counting) have signed, asking you not to give in,” he wrote. “You serve the people, and once you let this bad bad check deal go through, it is our people who will be hurt.”
However, it is not only the compromise of the blue state attorneys general, but also the Directors Guild of America, the Screen Actors Guild and the theater industry that they do not want the acquisition case to be further complicated and delayed. In other words, although Mark Ruffalo and others have always insisted on their position, by now, the forces supporting Paramount may have already gained the upper hand.
Sure enough, on September 30, Judge Araceli Martinez-Holkin, who had approved the emergency motion six days earlier at the request of Mark Ruffalo and others and temporarily froze the prosecutors’ request to withdraw the case, finally made the decision and agreed to a settlement between the two parties.
The new group Sky Dance holds a large number of blockbuster IPs
It is reported that the blue state attorney general reached a five-year agreement with David Ellison this time. In addition to increasing investment in film production and maintaining a 45-day window period for theaters, the outside world is particularly concerned about the television news business. Paramount agreed to set up separate independent editorial committees for CNN and CBS to eliminate interference from top management. Committee members will be selected by the board of directors and must have at least 10 years of journalism experience, and no more than two members may be from the same political party.
The initial focus of Bonta and others was to get Paramount to agree to sell CNN after acquiring Warner to prevent this important media from falling into the hands of the Ellison family, which has close ties to Trump and the Republican Party. However, this key element was not included in the final agreement. From this point alone, it can be seen that Paramount won a great victory in this negotiation.
Paramount quickly issued a statement after the deal was reached, thanking everyone, including Governor Gavin Newsom. They emphasized that the acquisition is “good for competition, good for consumers, and good for employees on both sides.” David Ellison also said, “Our goal has always been to create a stronger Hollywood, one that can tell more stories, provide more choices for consumers, and be more competitive. The merger of Paramount and Warner Bros. Discovery will build such a stronger Hollywood, create more opportunities for our employees, and bring more exciting entertainment content to global audiences.”
The newly established Sky Dance Group has many subsidiaries and platforms.
Paramount’s acquisition of Warner Bros. (or “merger” as the official term calls it), for a total of US$110 billion, is set to become the largest Hollywood acquisition in history. Next, the two companies are expected to complete the merger on October 6. Currently, the newly established Skydance Group, in addition to owning two of Hollywood’s top film studios, also integrates two major streaming media services, HBO Max and Paramount+, plus CBS, CNN, MTV, TBS, Comedy Central, Food Network and other television businesses. The new group’s IP will cover DC Universe, “Titanic”, “The Godfather”, “Harry Potter”, “Game of Thrones”, “Lord of the Rings”, “Transformers”, Nolan’s old works, “Yellowstone”, “Mission: Impossible”, “Top Gun”, “Interstellar”, “The Matrix” and a large number of popular HBO series, plus the Nickelodeon children’s entertainment empire. From the latest official announcement trailer of Sky Dance Group, we can see the huge number and richness of its IP.
On September 30, David Ellison hired 61-year-old Ynon Kreiz as co-CEO of the new group to assist him in completing the integration work. For this reason, Kretz left Mattel Group, where he had worked for eight years. In the past eight years, he has led the toy company to cooperate deeply with Hollywood and successively launched movies such as “Barbie” and “He-Man: The Rise of He-Man.” As for David Zaslav, who previously ran Warner Bros. Discovery (WBD) for four and a half years, he is not expected to hold any actual role in the new group. In return, he will receive a total of more than $550 million in stock and cash proceeds, including a $34.2 million cash severance package.
Much of this huge expenditure comes from $46.7 billion in equity financing guaranteed by David Ellison’s father, Larry Ellison. In addition, Paramount launched a $44 billion bond issuance plan last week. The remaining shortfall comes from commitments from the sovereign wealth funds of Saudi Arabia, Qatar and the United Arab Emirates totaling approximately $24 billion. According to Paramount, these three funds from the Middle East will hold 49.5% of the shares of the new group after the merger. This move breaks the convention that US media companies do not allow foreign funds to hold more than 25% of their shares. To this end, Brendan Carr of the US Federal Communications Commission, who has always followed Trump’s lead, specifically invoked the special exemption clause on the grounds that this move is “in the public interest.”
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