Paramount Skydance Corp. has reached a settlement with California and other states that were suing to block its proposed acquisition of Warner Bros. Discovery Inc. The settlement, which is expected to be announced later today, paves the way for one of the largest mergers in Hollywood history, valued at approximately $110 billion.
Settlement talks concluded over the weekend after four states that had initially opposed the terms outlined with California conceded. This resolution comes after reports on Monday indicated that shares of Warner Bros. Discovery and Paramount Skydance jumped, with Warner Bros. (WBD.O) rising 7.9% in premarket trading and Paramount (PSKY.O) gaining 6.8%, collectively adding about $6.30 billion to their valuations.
The concessions discussed during negotiations included a potential $1.5 billion investment in production in California, a commitment not to sell either studio lot, and possible penalties if Paramount fails to uphold a pledge to produce 30 movies annually after the merger. Other measures under consideration involved selling some cable channels and establishing a board to ensure editorial oversight of CNN, addressing key concerns for state attorneys general.
This settlement removes a significant hurdle for the merger, which had been put on hold pending the outcome of the states' antitrust lawsuit. The lawsuit, led by California Attorney General Rob Bonta and a coalition of 12 states, was initially set for trial on March 2, 2027. Paramount had also faced the prospect of accruing a $7 million daily "ticking fee" starting October 1 if the deal had not closed, which was a strong incentive to reach a settlement sooner.
Paramount had consistently argued that the deal is pro-competitive, aiming to increase content production to compete with streaming giants like Netflix and Amazon. The company had also reportedly used pressure tactics, including threatening to relocate from California, to urge Bonta to settle the case.
