One of the settled terms negotiated by the Gang of Four AGs in Paramount’s union of Warner Bros is that if the combined merger doesn’t yield the annual film commitment of 30-plus films, they may have to divest Par sister label Miramax.
Such a divestiture would be required if Paramount fails to make up for the shortfall of movies within six months.
California AG Rob Bonta, specified during this AM’s presser about the settlement, “Two penalties, they fail to meet the requirements of those films, one is a structural one, a divestiture, if you will of a corporate asset of Miramax. That is one of the penalties.”
Today’s settlement also reads, “If, upon the expiration of the Theatrical Cure Period, the Combined entity has failed to cure the shortfall, the Combined entity shall divest its entire direct and indirect ownership interest in Miramax studios (“Miramax Divestiture Assets”), on commercially reasonable terms, to a bona fide acquirer approved by the State Committee (such approval not to be unreasonably withheld or delayed) within twelve (12) months of the expiration of the Theatrical Cure Period (the “Miramax Divestiture”).
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It also notes, “The Combined Entity may not reacquire any part of or interest in the Miramax Divestiture Assets during the Commitment Period.”
It’s an intriguing penalty to put upon a merged company when you’re trying to get them to pump up their volume, especially as Bonta noted today that the combined merger’s theatrical output needs to include four films annually that are considered indie versus 20% which are classified as blockbusters.
Miramax, mind you, is not a huge piece of the Paramount empire, not near the size of say, CBS.
Interesting to note, that Paramount’s highest grossing movie of the year is a Miramax co-production, Scary Movie with $231.9M worldwide (and $108.2M domestic). Miramax also has the No. 1 TV series on Netflix worldwide, The Gentleman. At this time, there are no other Miramax movies dated on the Paramount theatrical release schedule in Rentrak.
Note that not every movie that Miramax makes, goes directly to Paramount. Miramax raises funds through foreign sales and other types of independent financing, and will sell off distribution rights often to the highest bidder on a package (i.e. the Jason Statham franchise The Beekeeper, and upcoming Supermax, Serendipity and 4 Kids Walk into a Bank are with Amazon MGM Studios; 2023 Oscar winner The Holdovers was released by Focus Features after that studio won distribution rights for $30M. Also the last Bridget Jones sequel, Bridget Jones: Mad About the Boy went through Universal. Peacock had the feature domestic, but it received an overseas theatrical release where it minted $140.4M).
Paramount closed a 49% stake in Miramax in 2020, with 51% controlled by Qatar based owner beIN Media Group. At the time of closing, ViacomCBS shelled out $150 million of the $375 million pricetag and committed to invest $225 million – comprised of $45 million annually over the next five years – to be used for new film and television productions and working capital. The deal was originally orchestrated in 2019 by then Paramount motion picture studio chief Jim Gianopulos.
“This agreement is the opposite of Disney-Fox,” Bonta also said this morning. “All the things we saw with the Disney-Fox merger: a massive decrease in film production, in film output; less films being made. This doesn’t just guard against that, and protect against the downside. It locks in a massive upside. Thirty films per year for two years, 32 films a year for the next three with requirements for what kind of films those are.”
The other penalty if Paramount-Warner Bros misses 30 films a year per Bonta: “For each film that they fail to make, should they fail to make any, $30M is paid to be split three different ways, but 90% of it goes to workers.”
