California Attorney General Rob Bonta announced a settlement Monday resolving a 12-state legal challenge to Paramount Skydance’s $110 billion merger with Warner Bros. Discovery. The agreement clears a major antitrust hurdle, pairing annual film production commitments with independent editorial boards for CNN and CBS News under mogul David Ellison.
The legal standoff over the entertainment merger shifted course Monday as California and a coalition of 11 other states reached a consent decree with Paramount. The proposed transaction joins two historic Hollywood studios, Paramount and Warner Bros., alongside streaming services Paramount+ and HBO Max and news operations CBS News and CNN, all steered by 43-year-old David Ellison.
The group of Democratic attorneys general originally sued to block the combination on July 13. Their 38-page complaint argued that the merger would extinguish competition
across Hollywood. To stave off an early March antitrust trial scheduled by U.S. District Judge Araceli Martínez-Olguín, Paramount agreed to freeze the transaction until the litigation concluded or until June 1, 2027.
Production Targets and Union Protections in the Settlement
Under the terms of the newly filed consent decree, the combined company must meet strict domestic film production quotas. The agreement requires a minimum of 30 film releases annually for the first two years, stepping up to 32 films in each of the following three years.
Failing to hit those output marks carries financial penalties. Paramount would pay a fee of $30 million for each missed film. Those funds would go directly into health care and retirement trust funds tied to prominent Hollywood unions, including the Writers Guild of America, the Directors Guild of America, and the International Alliance of Theatrical Stage Employees.
Beyond theatrical slates, the company committed to spending an additional $300 million on domestic U.S. film production compared to spending levels in 2025. New Jersey Attorney General’s office noted that the merged company will commit $47.5 million in a workforce fund over a five-year span. That money is earmarked for training and career development aimed at workers displaced by the corporate consolidation.
Safeguards for Cable Networks and Newsrooms
Regulators and state officials also targeted affiliate fee negotiations and newsroom independence. The consent decree mandates that the merged company must conduct negotiations for Paramount basic cable channels independently from negotiations for Warner basic cable channels, preserving the existing competitive dynamic between the companies. Breaching these affiliate rules could force Paramount to divest major basic cable networks, including BET, VH-1, Comedy Central, Smithsonian, Destination America, and Science, according to details submitted for judicial approval.
To address concerns over concentrated media power, the agreement establishes a dedicated news editorial independence board. This board will oversee both CBS News and CNN, setting rigorous standards and principles for newsgathering operations.
Ellison also expressed appreciation for the collaborative negotiations, stating in a release that he was grateful to Attorney General Bonta and his fellow AGs, as well as the WGA, for engaging in good faith to find a path forward to a resolution that serves all parties, and to Governor Newsom for his support throughout this process.
Clearing Regulatory Hurdles and Avoiding Ticking Fees
Financial pressures weighed heavily on the studio as it pushed toward a resolution. Paramount faced a quarterly ticking fee
of 25 cents a share payable to Warner shareholders if the transaction missed a September 30 deadline, a penalty totaling more than $600 million every three months.
Before settling with the state coalition, Paramount secured regulatory approval from the U.S. Department of Justice on June 12. International regulators also greenlit the combination, including clearances from China, Canada, Australia, and the European Commission. The European approval on July 21 required Paramount to divest its stake in United International Pictures and stay out of film distribution deals with Universal within the European Economic Area for a decade.
Major domestic theater operators, including AMC Theatres and Regal Cinemas, backed the transaction throughout the review process. Meanwhile, shares for both Paramount and Warner surged more than 10% following early reports of the state-level settlement.
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