Paramount Skydance has settled with a California-led group of US states and the Writers Guild of America, clearing a major legal obstacle for its $110 billion acquisition of Warner Bros Discovery. The resolution ends a months-long legal battle that threatened to block one of the largest media mergers in history, allowing CEO David Ellison to proceed with a deal that would consolidate significant power across Hollywood's film, television, streaming, and news sectors.
The settlement requires Paramount to accept specific operational constraints in exchange for avoiding a forced divestiture of assets such as CNN or its film franchises. Paramount agreed to abide by temporary film quotas and establish a news oversight committee. While the agreement pleased Warner Bros Discovery shareholders, it drew criticism from merger opponents who argue the consolidation will negatively impact Hollywood employment. On Monday, Warner Bros Discovery shares surged more than 10%, while Paramount shares pared back earlier gains.
California Attorney General Rob Bonta characterized the outcome as a strong antitrust resolution. Speaking at a press conference in Los Angeles, Bonta stated that the settlement ensures more production, greater consumer choice, and guardrails to keep the industry competitive. Although he expressed a personal view that the two companies should not merge, he noted that this perspective was not the focus of the legal resolution. The settlement also effectively forced the Writers Guild of America to proceed with its case independently, removing the support of government enforcers in a complex litigation that would have incurred millions in costs.
Under the terms of the state settlement, Paramount committed to increasing domestic film production spending by at least $300 million annually. The company must adhere to US theatrical release quotas for five years. Specifically, Paramount is required to produce 30 movies in each of the first two years following the deal's close, and 32 movies in each of the subsequent three years. At least four of these films each year must be independent productions, and at least 20% must be blockbusters. If Paramount falls below these thresholds, it will pay $30 million per missing film, with the majority of those funds directed to support workers. Additionally, Paramount promised not to raise rates for theater operators for three years.
The Writers Guild of America settled its parallel case against Paramount but maintained its position that the deal will damage the industry. The guild had argued that the merger would decrease pay and worsen working conditions for film and TV writers. In a separate development, Trump administration regulators had already cleared the transaction. A coalition of 12 state attorneys general, led by Bonta, had sued in July to block the merger, arguing it would reduce competition and create a media behemoth capable of raising prices in movies and television.
Paramount CEO David Ellison thanked the states and California Governor Gavin Newsom for their support during the process. In a statement, Ellison said the company's goal has always been to build a stronger Hollywood with more stories told and greater consumer choice. The companies previously disclosed that the merger would generate $6 billion in savings through cost cuts that would likely affect jobs across Hollywood and in CNN and CBS newsrooms. The combined entity is expected to hold $80 billion in debt.
The settlement also protects Paramount from a "ticking fee" owed to Warner shareholders for each day past September 30 that the deal remains unclosed. Antitrust regulators in other jurisdictions, including the European Union and Britain, have already cleared the deal. Reuters first reported on Friday that a settlement could occur as soon as the weekend.