Paramount settles states' lawsuit, clearing way for Warner Bros takeover

(Sharecast News) - Paramount Skydance has reached a settlement with 12 state attorneys general and the Writers Guild of America, clearing the final legal hurdle to its planned $111bn takeover of Warner Bros. Discovery.

The agreement averts a lengthy antitrust trial that had threatened to push the deal into mid‑2027 and trigger millions in delay‑related fees to Warner Bros shareholders.

Paramount's long path to the merger followed a bruising battle for control of the studio, with Netflix initially circling as a potential buyer and aggressively competing for franchises, talent and streaming dominance as Paramount's finances deteriorated.

The fight intensified through 2024-25 as multiple suitors explored bids while the company wrestled with debt, falling linear‑TV revenues and pressure to break itself up. Netflix ultimately pulled out of takeover discussions, leaving the field to Paramount.

California Attorney General Rob Bonta, who led the states' case, said the settlement was not an endorsement of the merger, but provided enforceable commitments addressing concerns that the tie‑up would reduce output and raise prices.

The states had argued the combination would "extinguish competition" across film, TV and streaming markets.

Under the five‑year court‑enforceable deal, Paramount must increase domestic film production, committing at least $1.5bn in additional spending, and meet strict annual release quotas - 30 films a year initially, rising to 32 in later years, with penalties of $30m per missed film and potential divestiture of Miramax if targets are not met.

The settlement also requires independent editorial boards for CNN and CBS News and places restrictions on cable‑negotiation practices to keep prices competitive.

However, critics said the concessions were too weak, accusing state officials of capitulating to corporate pressure and warning the deal still risks concentrating power in a single media giant.

Paramount CEO David Ellison, backed by the fortune of his father and Oracle co-founder Larry, welcomed the settlement, calling it "complete clearance" for the merger and telling employees the company expects to close the deal within about two weeks, pending judicial approval.

The combined group will unite two major Hollywood studios, key TV networks including CBS and CNN, and streaming platforms HBO Max and Paramount+.

Reporting by Frank Prenesti for Sharecast.com