California Attorney General Rob Bonta and Paramount Global reached a settlement on Monday that removes a significant barrier to Paramount’s $111 billion acquisition of Warner Bros. Discovery, in a deal that will combine two major movie studios alongside the streaming platforms HBO Max and Paramount+, as well as CNN and CBS News. The merger, which would place these assets under the control of David Ellison, a technology investor and entertainment executive, had faced legal challenges from multiple state attorneys general over antitrust concerns.
The protracted negotiations came amidst mounting pressure on both sides as a key deadline approached. Paramount had agreed to pay Warner Bros. Discovery $7 million daily in penalties if the deal failed to close by October 1. At the same time, Bonta’s office led a coalition of 12 states opposing the merger, arguing that it could harm competition and reduce diversity in entertainment and news. The lawsuit, supported by some major Hollywood guilds, was set for trial in March. However, with risks of a lengthy court battle and growing fears Paramount might leave California, discussions intensified in recent weeks.
Paramount’s threat to move operations out of California unsettled state officials and industry groups who fear job losses in a state central to the entertainment sector. Governor Gavin Newsom reportedly urged Bonta to seek a settlement, balancing concerns about potential layoffs with the risk of economic decline if the studios struggled independently. Labor organizations representing entertainment workers also called for a resolution to avoid prolonged uncertainty.
Bonta initially dismissed Paramount’s relocation threat as “blackmail” and emphasized the need for structural remedies such as divesting major assets like CNN. Instead, the final agreement stops short of forcing sales of key properties. The settlement includes measures to protect CNN’s editorial independence through oversight by a monitor and commitments from Paramount to distribute 30 films annually in theaters, increase domestic film production, and invest an additional $1.5 billion in content over five years. Only in the case of failing these terms would Paramount be required to divest smaller assets like its stake in the Miramax studio.
The deal faced resistance among some of the attorneys general involved in the lawsuit. New York Attorney General Letitia James and Connecticut’s William Tong, for example, pushed for broader conditions including breaking up parts of the company or more stringent guarantees for television production and news staffing. The Writers Guild of America, which filed a parallel antitrust suit, raised concerns about protections for writers and journalists. Ultimately, the guild secured a $17.5 million contribution toward its health care fund as part of the settlement, though some of its demands, such as caps on production relocations, were not met.
David Ellison responded enthusiastically to the settlement, projecting confidence that the transaction would close within two weeks. The merger would create a significant player in Hollywood, with Ellison and his father, Larry Ellison—co-founder of Oracle—already building a media empire since acquiring Paramount last year. Industry observers have noted the deal could lead to substantial cost savings, with Ellison committing to $6 billion in efficiencies, which may include layoffs.
Bonta acknowledged the settlement was not his preferred outcome but portrayed it as a pragmatic resolution amid the complexities of antitrust enforcement in an evolving media landscape. “This settlement is not a vote of support for this merger,” he said in a news conference, “It is not a blessing.” The agreement leaves open the possibility that further scrutiny or legal challenges could arise but clears the way for one of the most significant consolidations in the entertainment industry in recent years.