Paramount has reached a settlement with California and 11 other states that had sued to block its $110 billion acquisition of Warner Bros. Discovery, according to a source familiar with the matter. This resolution removes a major obstacle to closing the deal, which is poised to reshape Hollywood.
The settlement includes provisions for the creation of independent editorial boards for CNN and CBS, and a penalty of $30 million for each film if Paramount falls short of its commitment to release 30 movies annually. Paramount, Warner Bros. Discovery, and the California Attorney General's office did not immediately respond to requests for comment.
The agreement concludes months of regulatory and legal challenges surrounding the proposed merger, which would significantly concentrate power across Hollywood's film, television, streaming, and news sectors. The concessions aim to preserve newsroom independence and maintain movie production levels, bringing the companies closer to completing a merger that would form one of the world's largest media and entertainment conglomerates.
Shares of Paramount saw an increase of more than 5% on Monday, while Warner Bros. Discovery surged over 10% following reports of the potential settlement.
Writers Guild Challenge Remains
While federal regulators had cleared the deal, a coalition of 12 state attorneys general, led by California Attorney General Rob Bonta, filed a lawsuit in July. They argued the merger would reduce competition and create a media giant capable of increasing prices for movies and television.
Antitrust regulators in other global jurisdictions, including the European Union and Britain, have already approved the acquisition. The settlement with the states will help Paramount avoid a daily "ticking fee" of $7 million owed to Warner Bros. shareholders for each day the deal remains unclosed past September 30.
However, the Writers Guild of America has also filed a lawsuit to halt the deal, citing concerns that it would lead to decreased pay and worsened working conditions for film and television writers. The union warned in July that a combined entity would possess "both the incentive and the ability to lower costs by suppressing writers’ wages and reducing output."
A cleared Paramount-Warner deal suggests that regulators may be increasingly open to media consolidation as companies strive to compete with major players like Netflix and Walt Disney. The potential merger also raises further questions about the concentration of power within the news, sports, and entertainment industries.