Paramount Skydance has reached a settlement with California and 11 other states that had sued to block its $110 billion acquisition of Warner Bros. Discovery. This agreement clears a significant obstacle for the merger, which is set to create one of the world's largest media and entertainment groups. The settlement was reported on Monday, September 21, and comes after months of regulatory and legal wrangling over the deal.
The terms of the settlement include several concessions by Paramount. These reportedly involve a $1.5 billion investment in production in California, a commitment not to sell either studio lot, and potential penalties of $30 million per film if Paramount fails to honor a pledge to produce 30 movies annually. Additionally, the settlement mandates the creation of independent editorial boards for CNN and CBS, addressing concerns about editorial oversight. The agreement allows Paramount to avoid a $7 million-a-day "ticking fee" it would have owed Warner Bros. shareholders if the deal had not closed by September 30.
Shares of both companies reacted positively to the news. Warner Bros. Discovery (WBD.O) rose 7.9% in premarket trading, while Paramount (PSKY.O) gained 6.8%, adding a combined $6.30 billion to their valuations. The merger, valued at $110 billion, is the largest in Hollywood history. Despite the settlement with the states, the Writers Guild of America has also sued to stop the deal, arguing it would decrease pay and worsen working conditions for writers.
California Attorney General Rob Bonta led the 12-state coalition that sued to block the deal in July, despite prior approval from the U.S. Department of Justice. Bonta had insisted on "robust structural remedies," which opponents of the deal, such as the American Economic Liberties Project, criticized as caving to Paramount's pressure. The Los Angeles Economic Development Corporation had estimated that Paramount moving out of California could have resulted in the loss of up to $21.2 billion in annual economic output and nearly 58,000 jobs.
