Paramount Skydance has cleared a major legal hurdle in its proposed $110 billion acquisition of Warner Bros. Discovery after reaching a settlement with California and 11 other US states that had sued to block the transaction.
The agreement removes one of the most significant obstacles facing the deal, which would create one of the largest media and entertainment groups in the global market.
Under the settlement, independent editorial boards will be created for CNN and CBS. Paramount will also face a $30 million penalty for every film below its commitment to release 30 movies per year.
The measures are designed to address concerns raised during the antitrust case over newsroom independence and the potential impact of the merger on film production.
Why did US states challenge the Paramount-WBD deal?
A coalition of 12 state attorneys general led by California filed suit in July, arguing that the merger could reduce competition across the film and television sectors while increasing the combined company’s market power.
The transaction had already received clearance from federal regulators and authorities in other major jurisdictions, including the European Union and the UK. The latest settlement therefore removes one of the remaining major legal barriers in the US.
Why is closing the deal before September 30 significant?
The settlement could also help Paramount avoid a $7 million daily fee owed to Warner Bros. Discovery shareholders if the transaction remains unclosed after September 30.
Shares in both companies rose following news of the agreement, with Paramount gaining more than 8% and WBD climbing more than 10%.
However, the deal still faces a separate legal challenge from the Writers Guild of America, which has argued that the merger could put downward pressure on writers’ wages and employment opportunities.
Paramount has also been involved in discussions over further commitments, including investment in California production and possible changes to its cable portfolio, as it moves closer to completing the landmark acquisition.
