Paramount Skydance has settled a lawsuit brought by a coalition of US states, clearing a major hurdle to its $110 billion merger with Warner Bros Discovery. The states, led by California, had sued on antitrust grounds; the settlement requires Paramount to commit to minimum US film production levels and creates independent editorial boards for CNN and CBS.
States drop their challenge
Paramount Skydance settled a lawsuit with a coalition of US states led by California, removing a major obstacle to its $110 billion merger with Warner Bros Discovery. The states had sued on antitrust grounds, and the case had been previously set to head to trial in March, a delay that would have left the deal in limbo through mid-2027.
California Attorney General Rob Bonta said state officials agreed to terms after securing commitments to protect competition across film, television and broadcasting. Still, he was clear the settlement is not an endorsement of the deal. According to BBC News: "I don't think these two companies should merge."
Production commitments anchor the deal
Under the agreement, Paramount must release at least 30 films each year, and Bonta said the settlement guarantees a boost of $300 million to $1.5 billion more, at minimum, for film and TV production in the US. That baseline could rise sharply if Congress passes a federal film tax credit, potentially lifting production commitments by up to 700%.
The deal's initial terms also require 20% of all film production to take place in the US for the first two years, rising above 30% over the following three years. Sources told Reuters that the settlement further includes independent editorial boards for CNN and CBS and a $30 million penalty per film if Paramount falls short of Ellison's 30-movie pledge.
Paramount chief executive David Ellison welcomed the resolution, saying the settlement addresses the state attorneys general and Writers Guild of America concerns and gives the company complete clearance for the merger.
What the merger brings together
The acquisition combines Paramount and Warner Bros Discovery's film studios, a portfolio of TV networks, broadcast network CBS, and the Paramount+ and HBO Max streaming services. The deal had already won approval from US and international regulators, and Paramount had told investors it expected to close by Sept. 30 before California and 11 other states filed suit in mid-July.
As part of the merger agreement, Paramount had also agreed to a ticking fee that would add an estimated $650 million per quarter in cash value to the deal for Warner Bros Discovery shareholders if the transaction failed to close after Sept. 30. Theater owners and longtime industry players were skeptical that Paramount could deliver on Ellison's 30-film pledge, noting that no studio has put out more than 25 wide releases in a single year over the past 25 years.
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