Paramount Skydance's planned acquisition of Warner Bros Discovery has moved closer to completion after the company reached a settlement with California and 11 other US states. The $110 billion deal had faced legal challenges since July, with the states arguing that combining the two companies could reduce competition across film, television, streaming and news. The settlement removes a major legal hurdle for the merger, which would bring major film studios, television networks and streaming platforms under one company.
Under the settlement announced on Monday, September 21, Paramount agreed to several conditions covering film production, theatrical releases and news operations. The company must release at least 30 theatrical films each year for the first two years, increasing to 32 films annually for the following three years. At least four films each year must be independent productions, while at least 20 per cent of the annual slate must be major blockbuster releases.
Paramount will also spend at least $300 million more each year on film production in the US, compared with its 2025 level. That amounts to a minimum commitment of $1.5 billion over five years. The company could face a $30 million penalty for each film it fails to release under the agreed annual target. This move aims to ensure that the merged entity will continue to invest in film production and provide more content to audiences.
The settlement also includes measures covering Paramount's news businesses. An independent editorial board will be established to protect editorial independence at CBS News and CNN. Paramount has further agreed to maintain the physical studio lots of both companies and honour existing collective bargaining agreements. This is seen as a crucial step in preserving the integrity of the news operations.
The Writers Guild of America separately settled its lawsuit against Paramount. Under the agreement, Paramount will pay $17.5 million into the guild's health fund, cover legal fees and prohibit writer layoffs at CBS News for five years. However, the guild still believes the merger could hurt writers and the wider industry. The proposed deal would bring together major entertainment businesses including Paramount Pictures, Warner Bros Pictures, CBS, CNN, Paramount+ and HBO Max under one company.
The merger still requires final approval from a federal judge before it can be completed. The deal has already received antitrust approval from other major jurisdictions, including the European Union and the United Kingdom. Paramount CEO David Ellison welcomed the settlement, saying the company now had "complete clearance" for the merger.
California Attorney General Rob Bonta, who led the states' legal challenge, said the settlement should not be seen as support for the transaction. The agreement clears a major legal obstacle, but the merger's impact on the entertainment industry remains a topic of debate. The combined entity would control a significant portion of the US media market, with a large film and television library, including franchises such as 'Harry Potter' and 'Top Gun'.
Key points
- Paramount Skydance has agreed to increase US film production and maintain annual theatrical release targets as part of the settlement.
- The merger would bring together major entertainment businesses including Paramount Pictures, Warner Bros Pictures, CBS, CNN, Paramount+ and HBO Max under one company.
- The deal still requires final approval from a federal judge before it can be completed.
