- Paramount Skydance has reached a settlement with 12 states challenging its Warner Bros. Discovery acquisition, removing a major antitrust obstacle while a federal judge reviews the agreement.
Paramount Skydance (NASDAQ: PSKY) has reached a settlement with 12 states that sued to block its proposed acquisition of Warner Bros. Discovery (NASDAQ: WBD), removing a major legal obstacle to the $110 billion transaction.
The agreement, announced by California Attorney General Rob Bonta on Sept. 21, resolves the states' antitrust challenge, but the merger still requires approval of the proposed consent decree from US District Judge Araceli Martínez-Olguín. The judge has scheduled a Sept. 24 hearing to address outstanding questions about the settlement's legal basis and implementation.
Paramount has said it has satisfied the other closing conditions and received regulatory clearances from 69 jurisdictions. The company previously identified the state lawsuit and a separate Writers Guild of America challenge as the remaining barriers to closing.
What Did Paramount Agree To?
Under the proposed settlement, the combined company would invest an additional $300 million annually in US film production for five years, bringing the total additional commitment to $1.5 billion. Paramount would also be required to release at least 30 theatrical films annually during the first two years after closing and 32 annually during the following three years.
The settlement also prevents the company from selling or closing the Paramount or Warner Bros. studio lots in the Los Angeles area for at least five years. Another provision requires Paramount and Warner Bros. to negotiate separately for the distribution of their respective basic cable networks for five years after the merger.
The agreement also calls for an independent editorial board overseeing principles for news operations at CBS News and CNN, with the states set to monitor compliance with the settlement.
Why Is the Judge Still Reviewing the Deal?
The settlement does not automatically end the court proceedings. Judge Martínez-Olguín said the court was not yet ruling on the request to enter the consent decree and lift the restriction preventing Paramount from closing the transaction. Her Sept. 24 hearing is intended to address questions surrounding the agreement and how its requirements would be enforced.
The states had filed their lawsuit in July, arguing that combining Paramount and Warner Bros. would reduce competition in theatrical movie distribution and basic cable. Paramount rejected those allegations. The settlement also resolves the states' challenge without requiring Paramount to divest major assets.
When Could the Paramount Warner Bros. Merger Close?
Paramount CEO David Ellison said after the settlement that the company had achieved complete clearance for the transaction, although he acknowledged that work remained before closing. Paramount has previously indicated that it expects the deal to close shortly after the remaining legal issues are resolved.
The Sept. 24 court hearing is therefore the next major step for the Paramount Warner Bros. merger.
If the judge approves the consent decree and lifts the restriction on closing, Paramount and Warner Bros. Discovery would be positioned to complete a transaction combining Paramount's movie and television assets with Warner Bros., HBO Max, CNN, and other major entertainment properties.