Paramount Skydance has reached a settlement with California Attorney General Rob Bonta and 11 other state attorneys general, removing one of the biggest remaining obstacles to its proposed $111 billion acquisition of Warner Bros. Discovery.
The agreement ends the states’ antitrust challenge if a federal judge approves it, according to the Los Angeles Times, which first reported the settlement Sunday. The deal would allow Paramount CEO David Ellison to move closer to completing a merger that would combine two of Hollywood’s most storied studios, along with HBO, CBS, CNN, Paramount+, HBO Max and dozens of cable networks under one corporate roof.
Under the settlement, Paramount agreed to financial penalties if it fails to honor commitments tied to theatrical output and production in California. According to the Los Angeles Times, the company has pledged to release 30 films annually in theaters and spend $1.5 billion on film production in Hollywood over five years.
Reuters also reported that the agreement includes a $30 million penalty per film if Paramount falls short of the 30-film annual target, along with provisions for independent editorial oversight of CNN and CBS.
The settlement marks a sharp turn from just weeks ago, when Bonta and the coalition of states were preparing for a full antitrust trial. Their July lawsuit argued that combining Paramount and Warner Bros. would reduce competition in wide-release films and cable television and could give the merged company too much control over both production and distribution.
REELated:
Paramount exit could cost California up to 58,000 jobs
The road to a deal was anything but smooth.
Bonta canceled a mediation session in August after accusing Paramount of leaking confidential details from settlement talks. Negotiations eventually resumed, though some attorneys general reportedly pushed for stronger conditions addressing studio consolidation, job losses and control of news assets.
The pressure to resolve the case had been mounting.
Paramount faces an Oct. 1 deadline after which it is expected to begin paying Warner Bros. Discovery shareholders a “ticking fee” that could add roughly $7 million per day to the cost of the transaction. The company has also committed to more than $6 billion in cost reductions after the merger, raising concern about additional job losses across an already weakened entertainment economy.
A Los Angeles County economic analysis released in August estimated the merger could eliminate about 4,500 jobs in the Los Angeles region and reduce wages by approximately $1.26 billion over three years.
Paramount has already received clearance from the U.S. Justice Department and regulators in numerous international markets. The FCC also recently approved the company’s request allowing substantial foreign investment tied to the transaction, while the Ellison family would retain voting control.
One legal challenge remains. The Writers Guild of America has filed a separate lawsuit opposing the merger, arguing that further consolidation could reduce competition for writers and weaken employment conditions.
If the state settlement is approved, however, Paramount will have removed the most significant governmental roadblock standing between it and Warner Bros. Discovery.
The merger would create one of the world’s largest media companies, controlling franchises and brands ranging from Batman, Harry Potter and Bugs Bunny to Top Gun, CBS, CNN and HBO.
It would also leave Hollywood facing the same question that has followed the deal from the start: what happens when two of the industry’s biggest studios become one?
