Paramount Skydance has reached a settlement with 12 U.S. states over its proposed acquisition of Warner Bros. Discovery, moving the $110 billion transaction closer to completion. Under the agreement announced Monday by the California attorney general’s office, Paramount agreed to film-production commitments and safeguards for the editorial independence of CBS News and CNN in exchange for resolving the antitrust case.
Paramount CEO David Ellison plans to combine Warner Bros. Pictures, HBO, HBO Max, CNN, TBS and HGTV with Paramount’s existing assets, including Paramount Pictures, CBS, Paramount+, Pluto TV and Comedy Central. The combined company would become a major media group spanning film, television and streaming.
Settlement sets film-production targets
Under the settlement, Paramount will release 30 films a year for the next two years, followed by 32 films annually for the subsequent three years. The California attorney general’s office said some of those films must be produced in the United States, with at least 20% qualifying as “major films.” The agreement does not specify the production-budget threshold for that designation.
Paramount also agreed to increase domestic film production if California or New York adopts an uncapped state film-tax incentive. For regulators, the commitments address concerns that the merger could reduce the number of theatrical releases, large-budget productions and opportunities for film and television workers. For Paramount, they add production obligations after the deal closes.
The settlement also calls for a board to support the continued editorial independence of CBS News and CNN and to ensure that their reporting remains objective and fact-based. California officials stressed that the settlement does not amount to an endorsement of the merger or a withdrawal of their earlier concerns about its competitive effects.
Antitrust case had put the deal on hold
In July, 12 states and the Writers Guild of America sued to block Paramount’s purchase of Warner Bros. Discovery. The plaintiffs argued that the combined company would have too much control over theatrical films, big-budget productions and cable-channel distribution, potentially limiting opportunities for competitors and creators.
Paramount rejected those allegations, saying the deal would improve competition in Hollywood and benefit consumers. The company also said the transaction had already secured approval from other major regulators, including the U.S. Department of Justice. Actors including Mark Ruffalo and director J.J. Abrams opposed the deal in an open letter, arguing that greater industry concentration could reduce employment opportunities for creators.
A federal judge issued a temporary restraining order against the plaintiffs in July, putting the transaction on hold for a period. Paramount later agreed not to complete the acquisition before June 1, 2027, unless the antitrust case was resolved earlier. If the case ends before that date, the deal may close five days after a judgment or settlement. The trial had been scheduled to begin in early March next year.
Delay could cost Paramount about $7 million a day
Paramount had hoped to complete the transaction by the end of September to avoid what has been described as a ticking fee. If the deal extends beyond Oct. 1, Paramount would owe Warner Bros. Discovery about $7 million a day starting that day, or roughly $650 million on a quarterly basis. If the transaction ultimately fails, Paramount could also face a $7 billion breakup fee.
Paramount agreed in February to buy Warner Bros. Discovery for $31 a share. Netflix had previously participated in a bidding process that lasted several months and proposed paying $27.75 a share for Warner’s film and streaming assets, but it ultimately declined to raise its offer further.
Larger streaming bundle raises pricing questions
Combining Paramount+ with HBO Max would give the platform a larger library of films, television shows and original programming. Mike Proulx, a media research director at Forrester, said consumers remain concerned that the integration could lead to higher subscription prices.
Proulx said regulators have focused on theatrical-film volumes, U.S. production commitments and market structure, while consumers are more likely to ask whether the merger will improve the entertainment offering without increasing their monthly bills. Paramount employees have also been divided over the potential impact on jobs: some fear the integration could lead to layoffs, while others believe a larger operation would help the company compete with streaming giants such as Netflix and Disney.