OPINION
We write – as elected representatives of Hudson County at the state, county, and municipal levels – to express our serious concerns regarding New Jersey’s continued participation in the multistate litigation seeking to prevent the proposed combination of Paramount Skydance Corporation and Warner Bros. Discovery.
We do so from a place of enormous respect for Attorney General Davenport and for her leadership of the Department of Law and Public Safety. We are particularly proud of, her willingness to defend New Jersey and its residents against unlawful actions of the Trump Administration; to safeguard federal funding upon which our communities depend; to protect our citizens’ access to healthcare and other fundamental rights; and to marshal the considerable resources of the Department on behalf of New Jerseyans who most need their government to stand up for them. This week’s announcement of a monumental settlement that will make our children safer online is just another example. We regard her as an extraordinary Attorney General, and we say that without qualification or hyperbole.
We are mindful that decisions concerning the exercise of the Attorney General’s civil enforcement authority are entrusted to her independent judgment, and we do not ordinarily presume to second-guess that discretion. The extraordinary stakes for New Jersey in this matter, however, give rise to this rare but consequential disagreement. Hudson County has an unusually direct interest in this transaction. New Jersey has spent years building a film and television industry capable of competing with New York, California, Georgia, and production centers around the world including the U.K., attracting transformational investments from Netflix and Lionsgate. Paramount has become a critical participant in that effort and has committed to establishing a substantial, long-term production presence in Bayonne.
We represent the most densely populated county in New Jersey and one of the most diverse communities in America, where generations of immigrants and working families have come in search of economic opportunity, and where the availability of good paying, middle class union jobs can quite literally change the trajectory of a family. The development of 1888 Studios, and Paramount’s decision to make Hudson County a cornerstone of its long-term production strategy, represents the most consequential economic development opportunity Hudson County has seen in half a century. This is the creation of an entirely new economic ecosystem and a self-sustaining creative economy in our state: careers for electricians, laborers, carpenters, stagehands, technicians, artists, and countless others; new customers for our small businesses; and, critically, accessible pathways into a growing industry for young people and working families who too often have been excluded from the prosperity being created around them. Its economic reverberations will extend well beyond the studio gates.
Paramount and NJ
The overhaul of our state’s film and television programs by the Legislative and Executive Branches have made possible, in Hudson County alone: ~$1.2 billion in capital expenditures in the campus that Paramount will call home, 1.1 million square feet of permanent soundstages and post-production facilities in Hudson County, and most importantly, thousands of good paying permanent and project-specific jobs. The 1888 Studios/Paramount campus will be one of the largest film and television production campuses in the country. Paramount’s present commitment is for over 285,000 square feet. NJEDA has also designated Paramount a Studio Partner.
Paramount already provides approximately 6,000 jobs in New Jersey today, with four active productions representing as much as $400 million in investment, in addition to its 29,000 New York employees, many of whom are New Jersey residents. Six additional New Jersey productions are planned over the next 12 months, each representing up to $200 million in investment and 1,500 jobs, with billions of dollars in additional production spending forecast over the next 10 years until this action placed the commitments in jeopardy. A combined Paramount-Warner Bros. enterprise would only increase production activity and investment in this State, potentially including an expanded permanent presence at 1888 Studios.
Is the State’s position at odds with itself?
Given the Division of Law’s ongoing representation of NJEDA, the Governor’s Office, the New Jersey Motion Picture and Television Commission, and other entities in the State’s coordinated effort to induce Paramount to make an extraordinary long-term investment in New Jersey, including through substantial public incentives and the Studio Partner designation, we respectfully urge the Department to consider where the interests or objectives of governmental clients may compete with the objectives of affirmative litigation against Paramount that could materially impair the very investment its State clients spent years and substantial public resources securing. If the policy aims of joining the multistate action conflict with its clients’ policy aims, we ask the Department to reconcile its role as counsel to the State entities charged with bringing this transformative investment to New Jersey with its subsequent exercise of affirmative enforcement authority in a manner that could place that same investment at risk.
Taxpayer exposure
We are increasingly concerned that New Jersey taxpayer dollars are being committed to litigation whose merits appear uncertain while its potential costs to the State and to our economy continue to escalate. After an exhaustive eight-month investigation involving review of more than 2 million documents, the U.S. Department of Justice concluded that the transaction was unlikely to harm competition in streaming, linear television, or theatrical film. Federal antitrust authorities specifically recognized the competitive significance of Amazon MGM, Lionsgate, A24, Netflix, Apple, and other emerging and independent competitors. The same conclusion has been reached internationally; regulators representing 68 countries – including jurisdictions with considerably tougher antitrust laws and processes than ours – have all cleared the transaction.
Of course, that does not deprive New Jersey of her independent authority to enforce antitrust laws, and we need not defer to another regulator. Yet, it appears the other states have largely been deferential to California Attorney General Bonta, whose own governor has expressed concerns about the litigation and has urged him to settle or resolve the action.
This extraordinary degree of regulatory consensus around the world, together with the fact those regulators view the markets alleged in the complaint so differently, should prompt a rigorous assessment of whether continued expenditure of New Jersey resources represents a prudent use of taxpayer funds. That question has become more urgent because the cost of continued litigation is no longer confined to attorneys’ fees. California’s Attorney General has publicly estimated that prosecuting the states’ case will cost at least $20 million. What portion of those costs has New Jersey incurred or committed to bear? More significantly, beginning October 1, the merger agreement imposes approximately $7 million per day in additional consideration as closing is delayed, and Paramount has now moved for approximately $1.88 billion in security against losses it attributes to the injunction action—an amount that could be assessed on a joint and several basis, meaning any one of the 12 states involved could have to cover the full cost. We express no view as to whether that motion will succeed; the Department’s attorneys are far more qualified to assess these risks. We do, however, believe New Jersey taxpayers are entitled to know whether they face any conceivable exposure, what the State has already spent and expects to spend, and whether those risks were evaluated before joining the litigation.
Those questions are especially compelling when the litigation itself threatens billions of dollars in economic activity the State has simultaneously committed considerable resources to attract.
What next?
Now that New Jersey is a party to this litigation, whether or not we might have chosen a different course at the outset, the question is how best to protect the interests of the State going forward. We respectfully urge our Attorney General to withdraw our state from this action or work toward a prompt and reasonable resolution of this matter and to be a voice of reason in the room. The Department should reassess the merits, consider the wisdom of continuing to expend legislatively appropriated resources, analyze the mounting economic consequences of delay, and explore a reasonable settlement that protects legitimate antitrust interests without jeopardizing New Jersey’s extraordinary economic opportunity or unnecessarily frustrating the interests of the State entities the Department also represents.
There will be occasions when antitrust enforcement legitimately compels the State to challenge powerful companies notwithstanding local and statewide economic consequences. We support OAG when that is necessary, but our state government also has an obligation to recognize when its own actions are working at cross purposes.
New Jersey is not merely competing for a share of the modern film industry; we are reclaiming a piece of our history as the birthplace of American filmmaking, from Edison’s pioneering studio in West Orange to the emergence of Fort Lee as the nation’s first great motion picture production center. Organized labor and thousands of New Jersey workers and families seeking a pathway into the middle class are counting on the resulting jobs. The State should have an exceptionally compelling reason before spending taxpayer dollars on multistate litigation of uncertain merit that may undermine those very investments.
Let’s hope New Jersey finds a resolution or abandons its participation before the economic consequences become irreversible.
Sharon Ashe-Nadowski is the mayor of Bayonne; Craig Guy is the Hudson County Executive; Raj Mukherj, Brian Stack and Angela McKnight are state senators from Hudson County; and Jerry Walker, William Sampson, Ravi Bhalla, Katie Brennan, Larry Wainstein and Gabriel Rodriguez represet Hudson County in the State Assembly.