Paramount Skydance’s $110 billion merger with Warner Bros. Discovery will proceed after the company reached a settlement with a group of state attorneys general that had challenged the deal on antitrust grounds.
The lawsuit, led by California Attorney General Rob Bonta, was previously scheduled for trial in March and could have delayed the transaction until 2027. The settlement removes a major legal obstacle for the merger, which Paramount expects to complete within the next few weeks.
“Our shared aim was an outcome that best serves consumers, workers and, most importantly, the creative community so vital to the art of visual storytelling,” Paramount CEO David Ellison said in a statement.
Major entertainment assets will combine
The merger will unite two major Hollywood studios, Paramount and Warner Bros. Discovery, along with a collection of television networks, CBS, Paramount+ and HBO Max.
The agreement follows opposition from several groups, including state officials, the Writers Guild of America and members of the entertainment industry who raised concerns about the impact of consolidation on competition, jobs and creative opportunities.
Bonta emphasized that the settlement does not represent support for the broader merger.
“The settlement is not a vote of support for this merger,” Bonta said, adding that state officials remain concerned about increased consolidation in important economic markets.
Paramount agrees to production commitments
As part of the settlement, Paramount agreed to increase domestic film production, including boosting U.S. production spending by at least $300 million annually.
The company must also ensure that a portion of its films are produced domestically if a federal film tax credit is approved. The agreement requires 20% of films to be produced in the U.S. during the first two years after closing and 30% during the following three years.
Paramount will also maintain both its Paramount and Warner Bros. production facilities in Los Angeles.
Film release requirements included in agreement
The settlement requires Paramount to release 30 theatrical films during its first two years after closing and 32 films during the following three years.
At least four of those releases must be independent productions, and Paramount must create a fund dedicated to acquiring independent films.
The agreement also requires a minimum number of wide theatrical releases, with at least 20 films released in more than 2,000 theaters during the first two years and 21 films during the following three years.
Additionally, at least 20% of annual releases must qualify as major tentpole productions with budgets exceeding $50 million.
If Paramount fails to meet these commitments, the company could face penalties of up to $30 million per film. The agreement also includes potential requirements to divest Miramax if release obligations are not fulfilled.
Additional requirements for CBS, CNN and cable networks
The settlement also requires Paramount and Warner Bros. Discovery to continue negotiating cable distribution agreements separately.
If the company does not comply with those requirements, regulators could require divestiture of certain cable channels.
Paramount must also provide $9.5 million annually for workforce training, career development programs and community arts initiatives related to film and television production.
The agreement requires the creation of independent boards for CBS News and CNN to help maintain editorial independence following concerns about combined ownership of major news organizations.
Writers Guild of America reaches separate agreement
The Writers Guild of America also settled its legal challenge against the merger, although the union maintained concerns about the potential impact on writers and the broader entertainment industry.
Under the agreement, Paramount must prevent writer layoffs at CBS News’ broadcast team for five years and contribute $17.5 million to the guild’s health fund, along with covering legal fees from the lawsuit.
The settlement also requires Paramount to honor existing collective bargaining agreements and negotiate with unions in good faith.
Hollywood industry weighs impact of consolidation
The merger comes as Hollywood continues to adjust to major changes caused by streaming, shifting production strategies and increased competition from global markets.
Industry supporters argue that consolidation may provide companies with the scale needed to compete in a changing media landscape.
However, some industry participants remain concerned that previous mergers have resulted in fewer film releases and reduced opportunities for creators.
One major concern is whether Paramount can deliver on its commitment to release at least 30 wide theatrical films annually. Historically, no major studio has released more than 25 wide releases in a single year over the past two decades.
Paramount has offered multi-year agreements to cinema operators, allowing exhibitors to seek financial compensation if the company fails to meet its release commitments.
