Paramount reaches deal with California, other states over Warner merger - NBC News

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The California Attorney General’s Office announced a settlement agreement Monday resolving a 12-state legal challenge to Paramount Skydance’s $110 billion merger with Warner Bros. Discovery, clearing a key hurdle for the transaction.

The merger would blend together two historic film studios (Paramount and Warner Bros.), two popular streaming platforms (Paramount+ and HBO Max) and two news organizations (CBS News and CNN) under the leadership of 43-year-old mogul David Ellison.

The states opposing the deal, led by California Attorney General Rob Bonta, sued to block the merger July 13, arguing in a 38-page complaint that it would “extinguish competition” in Hollywood.

The terms of the agreement include a pledge by the company to release 30 films per year for the first two years of the deal, followed by 32 films in each of the following three years — or pay a fee for missing that target. Bonta also said that the combined company would invest more than $1 billion in production and film releases in the United States.

Paramount is also pledging to establish independent editorial boards overseeing the operations of CNN and CBS News.

Also Monday, the Writers’ Guild of America announced it had settled its lawsuit with Paramount. The guild, which is made up of more than 21,000 members, said in its statement that it is still opposed to the deal, but after the states moved to drop their case, it had to “contend with the reality of forging ahead alone.”

As part of its settlement terms, the union said Paramount has agreed “to prohibit writer layoffs at CBS News Broadcast for 5 years, and to pay $17.5 million to our health fund along with our attorneys’ fees in the litigation.”

Paramount had agreed to freeze the merger until either the antitrust challenge was resolved or June 1, 2027 — whichever came first. Judge Araceli Martínez-Olguín of the U.S. District Court for the Northern District of California, who is presiding over the case, had scheduled an antitrust trial for early March.

The fee of $30 million per missed film will be paid into healthcare and retirement trust funds associated with Hollywood unions, such as the Writers Guild, International Alliance of Theatrical Stage Employees and Directors Guild of America.

In a statement Monday, Ellison said, “We are grateful to Attorney General Bonta and his fellow AGs, as well as the WGA, for engaging in good faith to find a path forward to a resolution that serves all parties, and to Governor Newsom for his support throughout this process.”

“Our goal has always been to build a stronger Hollywood — one with more stories told, greater choice for consumers and stronger competition,” he added.

Our goal has always been to build a stronger Hollywood — one with more stories told, greater choice for consumers and stronger competition.

- Paramount skydance chief david ellison

Shares of both Paramount and Warner soared more than 10% as reports of the deal circulated early in the day.

Additionally, as part of the states’ settlement agreement, “the merged company must conduct negotiations for Paramount basic cable channels independently from negotiations for Warner basic cable channels, preserving the existing competitive dynamic between the companies,” New Jersey Attorney General Jennifer Davenport said in a statement.

“The merged company will commit $47.5 million in a workforce fund over five years for training and career development for workers who are displaced by the merger,” the statement said.

The lawsuit challenging the deal was filed by Bonta and his fellow Democratic attorneys general from Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.

They argued that the transaction violated Section 7 of the Clayton Antitrust Act of 1914, a federal law that bars mergers likely to reduce competition. The states said the deal would lessen competition in three areas: wide-release theatrical film distribution, anticipated top-grossing movie distribution and the market for distributing basic cable channels to cable and satellite providers.

Paramount rejected those claims, arguing that the states’ suit is “wrong on both the facts and the law” and “one of the weakest merger challenges in modern antitrust history.”