Paramount is engaged in advanced settlement discussions with California's Attorney General, Rob Bonta, regarding an antitrust lawsuit that has been obstructing the company's proposed $81 billion acquisition of Warner Bros. Discovery. California and 11 other states filed the lawsuit in July to block the merger, but these recent talks are aimed at resolving the legal challenge. The settlement negotiations could remove a significant hurdle for the deal, which is facing a federal trial scheduled for March 2027.
Financial pressures are driving Paramount's incentive to settle, as the company faces a mounting penalty of approximately $7 million per day, totaling around $650 million per quarter, under its merger agreement with Warner Bros. Discovery shareholders. If the merger is not closed by the June 2027 deadline, Paramount could owe Warner shareholders an estimated $1.7 billion. Shares of Warner Bros. Discovery rose 7.9% and Paramount gained 6.8% in premarket trading following reports of the settlement talks, adding a combined $6.30 billion to their valuations.
Key concessions being discussed include a $1.5 billion investment by Paramount in film and television production within California, a commitment to keep both the Paramount and Warner Bros. studio lots in Los Angeles, and maintaining the company's California headquarters. The talks also address ensuring the combined studios release at least 30 theatrical films annually, with potential penalties of $30 million per film if this commitment is not met. One scenario under consideration for missing this threshold is the sale of Paramount's stake in Miramax.
Additionally, the settlement discussions have reportedly explored the sale of some cable channels and the creation of a board to safeguard CNN's editorial independence, as CNN is the parent company of Warner Bros. Discovery. While California's Attorney General is pushing for a deal, some of the other states involved in the lawsuit, including New York and Connecticut, are reportedly not yet fully on board with the proposed terms, with New York seeking additional protections for workers. The Writers Guild of America has also filed its own antitrust lawsuit to block the deal.
