Paramount Skydance has reached a settlement with California and 11 other states, clearing the way for its $81 billion acquisition of Warner Bros. Discovery after months of legal challenges and regulatory scrutiny. The agreement, announced Monday by California Attorney General Rob Bonta, resolves a multistate antitrust lawsuit filed in July that had sought to block the merger on grounds that it would reduce competition in film production, cable television, and streaming services.
Under the terms of the court-enforceable settlement, Paramount has committed to producing at least 30 theatrical films each year for the first two years following the merger, increasing to 32 films annually in the subsequent three years. The company also pledged to invest an additional $1.5 billion in domestic film production over five years. If these film production targets are not met, Paramount must divest the Miramax film studio, a subsidiary with a catalog including titles like "Pulp Fiction."
The agreement includes provisions aimed at preserving editorial independence within the news operations that will be consolidated under the merged company, which will control both CNN and CBS News. Paramount agreed to establish independent editorial boards to oversee the content of these outlets, although details regarding the enforcement and scope of these boards remain unclear. The deal further requires Paramount to negotiate cable channel packages separately for the next five years, potentially limiting the bundling power of the merged entity in cable subscriptions.
Paramount also assured it would maintain ownership and continued operation of the Paramount and Warner Bros. studio lots in Los Angeles County, addressing concerns about potential job losses and the relocation of production. The company had previously signaled possible moves out of California in response to heightened opposition to the merger, a threat aimed at pressuring negotiators.
Attorney General Bonta acknowledged that the settlement is not an endorsement of the merger itself but characterized the resolution as a practical way to protect jobs and maintain competition. “I don’t think these two companies should merge,” he said, but emphasized that the agreement addresses key antitrust issues and supports workers who might be affected.
Despite the settlement, some state officials expressed disappointment with the outcome. Connecticut Attorney General William Tong stated he had sought the full divestiture of CNN and CBS News to safeguard independent journalism but was unable to secure that in the deal. Advocacy groups also voiced concerns that the concessions were insufficient, warning of potential job cuts, reduced competition, and higher prices for consumers.
Paramount CEO David Ellison, son of Oracle co-founder Larry Ellison and a figure whose political ties drew scrutiny during the merger process, welcomed the settlement. He described it as a step toward building “a stronger Hollywood,” promising expanded opportunities for workers and consumers. The combined company will control some of Hollywood’s most valuable franchises, including Harry Potter, the DC Universe, and Top Gun, as well as streaming platforms Paramount+ and HBO Max.
The settlement also resolved a parallel lawsuit filed by the Writers Guild of America, which had challenged the merger on grounds of potential harm to writers’ jobs and working conditions. As part of that resolution, Paramount committed to a five-year no-layoff agreement for CBS News writers and agreed to pay $17.5 million into the WGA’s health fund.
Regulators in nearly 70 jurisdictions, including the U.S. Justice Department and the European Union, have already approved the merger. The deal faces final court approval before Paramount can complete the acquisition, targeted for mid-October to avoid substantial “ticking fees” payable to Warner Bros. shareholders for delays past the original closing deadline.
The merger is expected to significantly reshape the entertainment industry by consolidating major film studios, cable networks, and streaming services under one corporate umbrella. While proponents argue it is necessary to compete against giant tech companies and evolving media consumption habits, critics remain wary of the potential impacts on competition, independent journalism, and employment in Hollywood.