Paramount Skydance has reached a settlement with a coalition of state attorneys general challenging its planned acquisition of Warner Bros. Discovery, removing one of the biggest remaining obstacles to a transaction that would reshape Hollywood’s media landscape.
The agreement with 12 state attorneys general resolves an antitrust case that had threatened to keep the roughly $111 billion transaction on hold until a federal trial next year, according to Variety. The New York Times also reported on the negotiations surrounding Paramount and Chief Executive Officer David Ellison’s effort to complete the Warner Bros. deal.
The settlement comes at a critical moment for Paramount. The company has been seeking to close the transaction before Oct. 1, when it would begin incurring a roughly $7 million-a-day fee tied to delays in completing the acquisition, according to Variety.
California Attorney General Rob Bonta had led the coalition of states seeking to block the combination, arguing that bringing Paramount and Warner Bros. Discovery under common ownership could reduce competition in theatrical film distribution and basic cable programming. A trial had been scheduled for March 2, 2027.
The states had contended that the transaction could ultimately mean higher costs and fewer choices for movie theaters and television distributors. Paramount disputed those allegations, saying the combination would create a stronger competitor to large streaming and technology companies. The U.S. Justice Department had previously cleared the transaction.
Negotiations intensified in recent days. Paramount and Bonta were in advanced settlement discussions by late last week, with potential compromises including an arrangement under which the two companies’ movie studios would continue operating separately for a period after the acquisition, according to Variety, citing earlier reporting by The Wall Street Journal.
Paramount has also made commitments aimed at addressing concerns about the effect of consolidation on Hollywood. The company previously pledged to release 30 films annually for three years and give those movies theatrical exclusivity for at least 45 days, Variety reported.
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Related: Paramount Nears Deal With California Officials Over $111 Billion WBD Acquisition
The agreement significantly improves Paramount’s path toward completing a takeover that would unite some of the entertainment industry’s best-known properties. Warner Bros. Discovery owns Warner Bros.’ film and television operations as well as CNN, while Paramount’s businesses include its namesake movie studio, CBS and its streaming operations.
The future of the companies’ news divisions has become a particularly contentious element of the transaction. Ellison has publicly pledged to preserve the editorial independence of the news organizations. In an opinion article published by The New York Times, he argued that concern over his prospective control of CNN — rather than traditional questions about market concentration — was playing an important role in opposition to the transaction. That was Ellison’s characterization of the dispute; the state attorneys general’s lawsuit focused on alleged competitive harm in theatrical distribution and basic cable.
The deal is being financed in part with support from Ellison’s father, Oracle co-founder Larry Ellison, as well as investment linked to sovereign wealth funds from Saudi Arabia, Qatar and Abu Dhabi, according to Variety.
The settlement marks a major turn in a legal confrontation that only weeks ago appeared capable of delaying the takeover well into 2027. Paramount had agreed not to close the transaction before resolution of the states’ case, while simultaneously seeking a $1.88 billion bond that it said would compensate for potential costs associated with a prolonged delay.
With the states’ challenge moving toward resolution, attention now shifts to the remaining steps required to consummate the transaction and the conditions Paramount will have to satisfy under the settlement.
The combination, if completed, would bring two of Hollywood’s most prominent studios and major television and streaming assets under a single corporate owner, accelerating a consolidation drive across an entertainment industry confronting declining traditional-TV audiences, costly streaming competition and pressure on theatrical economics.
Source: Variety
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