Paramount Skydance emerged victorious on Monday from a legal battle over its $110 billion acquisition of Warner Bros Discovery after settling with a California-led group of US states and a Hollywood writers union, paving the way for one of the largest media mergers in history.
The settlement marks a major win for Paramount CEO David Ellison, who battled the states for months to finalize a deal that would dramatically concentrate power across Hollywood's film, TV, streaming and news businesses.
Paramount agreed to abide by temporary film quotas and a news oversight committee, avoiding a forced sale of cable assets such as CNN or any of its lucrative film franchises.
The settlement delighted Warner Bros shareholders, but drew criticism from opponents of the merger who say it will hurt Hollywood jobs. Shares of Paramount pared back earlier gains on Monday, while Warner Bros Discovery surged more than 10%.
The Writers Guild of America settled its parallel case against Paramount, while saying it still believes the deal will damage the industry. The states' settlement forced the union to "contend with the reality of forging ahead alone, with no backing from government enforcers" in a complex case that would have cost millions of dollars.
California Attorney General Rob Bonta called the settlement "a strong antitrust outcome."
"More production, more choice, and guardrails that keep this industry competitive. I don't think these two companies should merge, but that's not something that we are focused on with our resolution here," he said at a press conference in Los Angeles.
Paramount promised in the state settlement to bring more film production to the US — spending at least $300 million more each year in domestic production — and adhere to US theatrical release quotas for five years.
The company will produce 30 movies in each of the first two years of the deal, and 32 movies in each of the following three years, Bonta said. Each year, at least four of those films must be independent films and at least 20% must be blockbusters. If it falls below that threshold, it will pay $30 million per film, most of it into funds to support workers.
Paramount also promised not to raise rates on theater operators for three years.
Under the settlement terms, Paramount will establish a news editorial independence board to ensure independence at the CBS and CNN networks.
Reuters first reported on Friday that Paramount and the states could settle as soon as the weekend.
Ellison thanked the states and California Governor Gavin Newsom for his support throughout the process.
"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.
While Trump administration regulators cleared the deal, a coalition of 12 state attorneys general, led by California's Bonta, sued in July to block the merger, arguing it would reduce competition and create a media behemoth with the power to raise prices in movies and television.
The Writers Guild also sued to stop the deal, arguing it would decrease pay and worsen working conditions for film and TV writers.
The companies said earlier this year the merger will mean $6 billion in savings, through moves including cost cuts that would likely affect jobs across Hollywood as well as in the CNN and CBS newsrooms. The combined company is expected to hold $80 billion in debt.
The settlement helps Paramount avoid a $7 million-a-day "ticking fee" it would have owed Warner shareholders for each day the deal does not close past September 30.
Antitrust regulators in other jurisdictions globally, including the European Union and Britain, have already cleared the deal.
