Paramount Skydance has reached a settlement with California and several other U.S. states over its proposed merger with Warner Bros. Discovery, removing a major legal obstacle to the $110 billion transaction. California Attorney General Rob Bonta stressed that the agreement does not mean the state supports the merger and said he still believes the companies should not combine.
States Focused on Competition in Film and Broadcasting
California led the lawsuit, joined by attorneys general from states including Arizona, Colorado and New Jersey. The states had argued that combining two major film and media companies could weaken competition in movie production, television programming and broadcasting.
Bonta said the states agreed to settle after Paramount made commitments intended to protect competition across the film, television and broadcast markets. Paramount Chief Executive David Ellison said the parties shared the goal of producing better outcomes for consumers, employees and the creative workers essential to film and television production.
Ellison said in a statement that, after addressing the main concerns raised by the state attorneys general and the Writers Guild of America, Paramount considered the merger to have received “complete clearance” and was prepared to implement the commitments. Ellison had previously threatened to move the company’s production operations out of California if the deal faced obstruction.
The settlement does not require the combined company to keep its headquarters in California. Bonta specifically noted that, although Ellison had previously said the merged company would remain in the state for the foreseeable future, that arrangement is not a legally binding term of the deal.
Paramount Faces U.S. Production Commitments
Under the settlement, Paramount will be required to meet a series of film and television production commitments. At least 20% of the combined company’s film production must take place in the United States during the first two years after the merger. That share must rise above 30% over the following three years.
Paramount must also release at least 30 films each year. Bonta said the requirement is intended to support domestic film production and increase economic activity, while preventing the company from meeting the annual target through a large volume of low-budget productions or automated content.
The agreement also places limits on films generated with artificial intelligence. Bonta said the state wanted to ensure that such projects were “real, complete films” capable of generating production spending and providing work for people in the film and television industry. For the combined Paramount, the provisions add a defined domestic-production obligation to the challenges of integrating content operations and controlling costs.
Bonta estimates that the commitments could generate between $300 million and $1.5 billion in additional economic activity for U.S. film and television production. He said that estimate represents only a minimum baseline. If Congress approves a federal film tax credit, the increase in production activity could reach as much as 700%. That additional potential depends on future legislation and is not a benefit established by the current settlement.
Writers Guild Still Opposes the Deal
The Writers Guild of America said that, although its own lawsuit has been resolved, it still believes the merger would harm writers and the broader entertainment industry. The guild said that, as a nonprofit organization, it could not realistically continue bearing the cost of separate litigation without government support and therefore had been forced to accept a settlement.
The agreement requires Paramount to pay $17.5 million to the WGA health fund, cover related legal expenses and commit not to cut writing positions at CBS News Broadcast for five years. The provisions primarily address employee benefits and job stability, but the WGA has not changed its position on the potential effects of the merger on the industry.
Independent Monitor to Oversee Compliance
Paramount has agreed to appoint an independent monitor to oversee ongoing compliance with the settlement. The monitoring process will cover the required production shares, annual film releases, restrictions on AI-generated content and employment commitments.
With the state governments’ and the Writers Guild’s lawsuits addressed, Paramount and Warner Bros. Discovery must still proceed through the applicable merger-review process. The settlement resolves the main state-level litigation barrier, but uncertainty remains over the headquarters arrangement, whether Congress will approve a federal tax credit and the WGA’s concerns about the deal’s broader industry consequences.