Paramount Skydance Corp. has settled with California and 11 other states, resolving a 12-state legal challenge to its proposed $110 billion acquisition of Warner Bros. Discovery Inc. This settlement clears a significant hurdle for one of Hollywood's largest mergers, which was previously approved by the U.S. Department of Justice but faced antitrust concerns from the states. The lawsuit, filed on July 13, argued that the merger would "extinguish competition" in the entertainment industry.
The terms of the settlement include a pledge from the combined company to release 30 films per year for the first two years, followed by 32 films annually for the next three years. A penalty of $30 million per missed film will be paid into health care and retirement trust funds for Hollywood unions such as the Writers Guild, IATSE, and Directors Guild of America. Additionally, Paramount has committed to establishing independent editorial boards for CNN and CBS News, investing over $1 billion in U.S. production and film releases, and conducting separate negotiations for Paramount and Warner Bros. basic cable channels.
California Attorney General Rob Bonta, who led the coalition of states opposing the deal, initially sought "robust structural remedies." The states, including Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington, had sued under Section 7 of the Clayton Antitrust Act, citing concerns about competition in theatrical film distribution and basic cable channel distribution. The settlement also includes a $47.5 million workforce fund over five years for training and career development for employees displaced by the merger.
The merger, valued at $110 billion to $111 billion, will bring together Paramount Pictures and Warner Bros. Pictures studios, streaming platforms Paramount+ and HBO Max, and news organizations CBS News and CNN under the leadership of David Ellison. Shares of both Paramount Skydance and Warner Bros. Discovery rose more than 10% following reports of the settlement. The agreement also relieves Paramount of a "ticking fee" of 25 cents per share per quarter, amounting to over $600 million every three months, that would have been due if the transaction didn't close by September 30.
