Paramount's Warner decree funds indie film at $1.25m a picture

The consent decree Paramount Skydance filed on Monday requires the merged company to release at least four independent films a year. It attaches $5m a year to buy independent films. That is $1.25m a picture.

In January, A24 paid north of $12m for the domestic rights to one Sundance title.

The settlement, agreed with twelve state attorneys general and the Writers Guild of America, runs for five years and expires on 31 December 2031. California attorney general Rob Bonta's office published the terms the same day: an extra $300m a year of domestic film production, $1.5bn over the term; a $47.5m workforce fund for people made redundant by the merger; a News Editorial Independence Board covering CNN and CBS News; and an Independent Film Fund of $5m a year, $25m in total, for pictures originated outside Paramount, Disney, Universal and Sony, or built on original screenplays.

Then a federal judge declined to sign it.

What $1.25m buys

Take the fund at face value. The decree obliges the company to put out four independent titles a year, and the only acquisition money anywhere near that obligation is $5m. Divide one by the other.

$1.25m is not nothing. It is roughly the going rate for a documentary with no names in it, or a first feature nobody else bid on. It is not what the market charges for the independent films people actually queue for. Olivia Wilde's The Invite, with Seth Rogen, Penélope Cruz and Edward Norton, went to A24 after a bidding war at Sundance in January that ran three days and saw off Focus Features, Netflix, Apple and Searchlight, at a price Variety put north of $12m for domestic rights alone. Neon paid seven figures for Adrian Chiarella's Leviticus at the same festival. One Invite would swallow two and a half years of the fund.

A24 is the fair comparison, because it is the kind of buyer the fund is implicitly meant to stand in for. It bought The Invite off its own balance sheet, at a price set by five other bidders in the room, and it is currently asking exhibitors for an extra ten points of film rental on its wide releases. Independent distribution at that level is a business with real money moving through it. $5m a year is a line item.

In fairness to the drafting, the decree does not say the fund has to pay for those four releases, and some of them will be films the company develops itself. The two provisions still sit in the same document, answering the same complaint, and the fund is the only cash attached to any of it.

The number that gives the game away

Miss a film and the penalty is $30m.

That is what the decree charges for each theatrical release the company fails to deliver against its quota, which is thirty films a year in years one and two, of which at least twenty must be wide releases, rising to thirty-two and twenty-one from year three. The money goes to the guild health and retirement plans and the Motion Picture and Television Fund. Fail to cure a shortfall inside six months and Paramount must divest its entire interest in Miramax.

So one missing wide release costs $30m. Five years of buying independent films costs $25m. The ordering is the story: the settlement treats a gap in the tentpole schedule as a more serious injury than the whole of independent acquisition, by six to one on an annual basis, in a document that exists because twelve attorneys general argued the merger would squeeze independent film.

We counted the release quota last Sunday. Thirty films is 58% more than the nineteen Warner Bros. and Paramount actually released between them in 2025, and the $30m charge is what makes that promise expensive to break. No comparable penalty has been reported for underspending the film fund.

Thursday, in Oakland

Judge Araceli Martínez-Olguín took the hearing by video at 11am Pacific and opened by telling the parties what the next hour was not going to be. "The court isn't a rubber stamp of your agreement… I have some questions," she said, according to Variety. What she wanted established was that the deal in front of her was an arm's length negotiation rather than a collusive one.

Paula Blizzard, the senior assistant attorney general who runs California's antitrust section, told the court the states had settled in part because a permanent block was not realistically on the table, since Warner Bros. Discovery would look for another partner.

The judge did not rule. A decision, she said, would come in "due course".

Shortly before the hearing she granted an emergency motion from the Block the Merger coalition, giving it leave to file ten-page amicus briefs by one minute past midnight Pacific on Friday, as TheWrap reported. The coalition is Free Press, the Committee for the First Amendment, the Freedom of the Press Foundation, the Future Film Coalition and the International Documentary Association. LULAC filed separately.

"This merger eliminates a competitor, and the proposed consent decrees are insufficient in restoring that competition," Jax Deluca of the Future Film Coalition said in the group's own statement. Mara Verheyden-Hilliard of the Committee for the First Amendment called the decree a failure to mitigate the harms of a monopoly merger. Neither Paramount nor Bonta's office has answered that characterisation in public.

Five days

Paramount's revised $31-a-share offer carries a ticking fee: $0.25 per Warner Bros. Discovery share per quarter, measured daily, payable to Warner shareholders if the transaction has not closed by 30 September. We wrote about that clock on 10 September, when almost nobody else was discussing it. Against Warner's share count it comes to roughly $650m a quarter, or about $7m a day.

David Ellison, Paramount's chief executive, told staff in a memo on Monday that the goal was to "close in approximately two weeks", which would put completion in early October. He wrote that before a judge told his lawyers she was not a rubber stamp.

The parties must file replies to a letter from Senator Cory Booker by noon Pacific on Monday 28 September. Two days after that, the meter starts.