Paramount settles states' challenge to Warner Bros. merger

Paramount Skydance Corp. reached a settlement Monday with 12 state attorneys general that clears a major obstacle to its acquisition of Warner Bros. Discovery Inc., agreeing to five years of behavioral remedies while avoiding the immediate sale of either movie studio or major cable assets.

The Writers Guild of America also settled its separate antitrust lawsuit over the merger.

California Attorney General Rob Bonta, who led the states' challenge, emphasized protections for entertainment workers and consumers at a Monday news conference but made clear the settlement did not resolve his broader concerns about the combination.

"It is not a blessing of the broader merger," Bonta said. "It doesn't serve the American economy, consumers or competition well."

Under the proposed consent decree, Paramount will not have to divest either of its movie studios or Warner Bros. Discovery cable networks, including CNN.

The agreement instead requires the combined company to release at least 30 movies annually during its first two years and 32 in each of the following three years. At least four each year must be independent films. Missing the annual target would trigger a $30 million payment for each film short of the requirement and could force the company to divest Miramax.

Paramount also agreed to spend at least $1.5 billion more on U.S. film production over five years than the companies spent in 2025 and contribute $47.5 million to a workforce fund for employees affected by the merger.

The settlement also requires Paramount and Warner Bros. Discovery to negotiate their basic cable channels separately for five years, preserving some competition between their channel portfolios. Certain violations could trigger divestitures of cable assets.

CNN and CBS News would remain under the combined company but operate under a newly created News Editorial Independence Board intended to protect journalistic independence.

Connecticut Attorney General William Tong agreed to the settlement but said he had sought stronger structural remedies, including divestiture of CNN and CBS News.

Paramount CEO David Ellison hailed the agreement and praised Gov. Gavin Newsom "for his support throughout the process."

"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," Ellison said.

One thing the agreement does not require is that Paramount keep its headquarters in California.

"It's not part of the deal," Bonta said, adding that he nevertheless expects the headquarters to remain in the Los Angeles area.

The Paramount and Warner Bros. studio lots must remain open for five years. After that, however, most of the settlement's restrictions expire unless extended.

John M. Newman, former deputy director of the Federal Trade Commission's Bureau of Competition, noted that the same sunset applies to the studio-lot protections.

"After five years, the merged company can sell off one or both lots," he said.

The settlement ends a case in which the states had won significant early procedural victories. U.S. District Judge Araceli Martinez-Olguin temporarily blocked the merger in July, and the parties later agreed the transaction would remain on hold pending further proceedings.

The states alleged the $110 billion combination would reduce competition in theatrical film distribution and basic cable programming, harming theaters, distributors, workers and consumers.

Paramount, meanwhile, faced mounting pressure to close the transaction and had warned that continued delays could lead it to move operations out of California.

George Alan Hay, a Cornell Law School professor, said the company surrendered relatively little because it was unlikely to move its headquarters or close its main studio lots during the next five years anyway.

The states, he said, held out "until they got something they could sell to their constituents as a victory."

The proposed settlement remains subject to court approval.

State of California et al. v. Paramount Skydance Corp. et al., 26-cv-07116 (N.D. Cal., filed July 13, 2026).