Paramount settles lawsuits with 12 US states, clearing way for Warner merger

Paramount has reached a settlement with California and several other states that sued over a proposed $81bn merger with Warner Bros Discovery (WBD), the California attorney general announced Monday, clearing the way to consolidate some of Hollywood’s most recognizable TV networks and studios under one owner.

Though the merger was approved by the justice department in June, a coalition of 12 states, led by California, had sued over concerns that combining two of the five last legacy studios in Hollywood would “extinguish competition” and lead to fewer movies in theaters and on streaming platforms.

Rob Bonta, the California attorney general who spearheaded the antitrust litigation, said in a news conference on Monday that Paramount had made an “enforceable commitment to significantly increase” production in the US and specifically in Los Angeles, which he said would mean “more jobs, more economic activity”.

“This settlement is not a vote of support for this merger; it’s not a blessing of the broader merger,” he said. “Broadly speaking, we believe further consolidation in markets that are essential to American economic life doesn’t serve the American economy, consumers or competition well.”

Four holdout states – Massachusetts, New York, Connecticut and Minnesota – held out on a deal until this weekend, according to Bloomberg.

Paramount, as part of the settlement, agreed that CBS and CNN would maintain independent editorial boards under the merger. Paramount also agreed to spend at least $300m in domestic production, and would be forced to pay a financial penalty ifthe newly merged company fails to distribute 30 films for the first two years of the deal and 32 movies in the three years after. In return, Paramount will not have to sell its cable channels, which include CBS, MTV, Nickelodeon and Showtime, as was discussed in negotiations, the Wall Street Journal reported.

Bonta also added that together, the parties would select a trustee to monitor Paramount’s compliance with the terms of the settlement, and would be prepared to go to court if the company ever fails to comply.

David Ellison, the CEO and owner of Paramount and son of billionaire tech mogul Larry Ellison, said on Monday that he was grateful to Bonta, other state attorney generals and California governor Gavin Newsom for “engaging in good faith to find a path forward to a resolution”, and reiterated his message that the merger would be “pro-competitive, pro-consumer and pro-worker”.

“Our goal has always been to build a stronger Hollywood — one with more stories told, greater choice for consumers and stronger competition,” he said in a statement. “Bringing Paramount and Warner Bros. Discovery together will build that stronger Hollywood, creating expanded opportunity for our people and even more great entertainment for audiences around the world.”

The legal battle has been a headache for Paramount executives, considering that a closing date past 30 September would have reportedly add millions of dollars to the purchase price.

Reports emerged last week that, after months of speculation, WBD and Paramount were in the process of selling their studio lots in California and leaving the state amid the antitrust lawsuit, which would have been an enormous hit to Los Angeles’s already struggling film and entertainment industry.

Whispers of Paramount Skydance plotting a California exit had circulated for months, though there was speculation the reports amounted to strategically leaked leverage as the media company sought a bargaining chip in the lawsuit.

In an August news release, Ellison called the lawsuit the “final obstacle” to the merger, describing the deal as “pro-competitive, pro-consumer and pro-worker”.

Twelve states warned that a merger between Paramount Skydance and Warner Bros Discovery would result in fewer entertainment options and higher prices for consumers.

Bonta also has voiced concern about how a merger could affect CNN’s journalism. (CNN is owned by WBD.)

Last summer, Skydance Media bought Paramount in an $8.4bn merger, a deal led by Ellison. After US regulators approved the deal, Paramount reached a $16m settlement with Donald Trump over a 60 Minutes interview with Kamala Harris. It also announced the cancellation of the Late Night with Stephen Colbert show, which aired its last episode in May.

After the merger, Ellison appointed Bari Weiss as editor-in-chief of CBS News. The network has since been roiled by allegations of bias favoring the Trump administration.

In a guest essay published in the New York Times last month, Ellison wrote that the anti-trust lawsuit stemmed from concerns over “whether I can be trusted as a steward of Warner’s CNN”.

“I do not aspire to lead these companies to bend their newsrooms to my views. I believe that news should be based on facts and truth,” Ellison wrote. “Great news organizations like CNN and CBS News are here to tell it straight down the middle. That requires newsrooms that reflect the whole world, not one side of it. And it requires independence. Our journalists will continue to answer to the facts and to all the people they serve – not to any party or cause.”