After months of legal challenges and negotiations, Paramount Skydance and Warner Bros. Discovery have reached a settlement with California Attorney General Rob Bonta and 11 other US states. The agreement clears a major legal obstacle to Paramount’s proposed takeover of Warner Bros. Discovery.
The lawsuit was led by California and involved 12 state attorneys general. The states had challenged the merger over concerns that combining the two major entertainment companies could reduce competition, affect film production and potentially increase prices for consumers.
Under the settlement, Paramount has agreed to several conditions aimed at addressing those concerns. The agreement includes a five-year commitment to maintain a certain level of theatrical film releases and increase investment in film production in the United States.
Paramount has agreed to release at least 30 films each year during the first two years after the merger, followed by 32 films annually for the next three years. If the company fails to meet these commitments, it could face financial penalties and, under certain conditions, be required to divest Miramax.
The company has also agreed to invest at least an additional $1.5 billion in US film production over five years compared with its 2025 spending levels. A separate $47.5 million fund will support workers affected by the merger through training and career-development programmes.
The settlement also includes measures involving cable television and news operations. Paramount and Warner Bros. channels will have to be negotiated separately for five years. The agreement also calls for a News Editorial Independence Board covering news operations at CBS and CNN.
Bonta said the settlement was not an endorsement of the merger, but said it addressed the antitrust concerns raised by the states. The states had initially sought to block the transaction.
Paramount CEO David Ellison welcomed the agreement, saying it provides a path toward completing the merger. The company now expects to move ahead with the transaction after the remaining legal process is completed.
However, the merger still needs final approval from a federal judge. If approved, the deal would combine major film studios, television networks and streaming services, creating one of the largest entertainment companies in Hollywood.
The settlement therefore brings the two companies significantly closer to completing the merger, while adding legally enforceable commitments intended to address competition, production, worker and news-independence concerns.