Paramount Skydance Settles Antitrust Suit, Paving Way for $111 Billion Warner Bros. Discovery Deal; Shares Edge Up

Paramount Skydance’s $111 billion acquisition of Warner Bros. Discovery cleared a major legal hurdle Monday after the company reached a settlement with a coalition of 12 state attorneys general led by California’s Rob Bonta. Shares of Paramount closed Tuesday at $10.11, up 2%, according to Deadline, reversing a late-day slump on Monday that followed the settlement announcement. Warner Bros. Discovery shares were essentially flat for the day.

The settlement heads off a trial originally set for March 2027 that could have delayed the merger into mid-2027. The deal is now expected to close within weeks, possibly sooner than anticipated, the Nasdaq.com report noted.

**Settlement terms**

Under the five-year consent decree, Paramount agreed to increase domestic production by at least $300 million annually, according to the Reuters timeline published by The Star. The company also committed to release 30 films theatrically in the first two years after closing and 32 films in the following three years. In the first two years, 20 of the 30 films must go into wide distribution; in years three through five, 21 of the 32 must go wide, according to Cinema United, the movie theater trade group cited by Deadline.

The settlement also requires Paramount to keep the Paramount and Warner Bros. production lots, and to negotiate separately with pay-TV operators for cable networks during the consent decree period, the Reuters timeline reported. California Attorney General Rob Bonta said in a press conference that the agreement includes spending at least $300 million more each year in domestic production and boosting annual film releases progressively. “The settlement is not a vote of support for this merger,” Bonta added, according to The Star.

**Editorial oversight board for CNN, CBS News**

A surprise element of the settlement is the creation of a five-person editorial board tasked with monitoring editorial independence at CNN and CBS News. The board will be appointed by Paramount’s board, which is controlled by Paramount Chief Executive David Ellison’s family and RedBird Capital Partners. No Paramount executives, including CBS News editor in chief Bari Weiss, can serve on the board, the Los Angeles Times reported.

Critics immediately questioned the board’s effectiveness. “The so-called independence board appears to be sorely lacking in independence. It’s appointed by and answerable to the board of the combined Ellison-controlled entity, which can also remove the independence board members,” Norm Eisen, founder of Democracy Defenders Action and a leader of the Block the Merger group, told the Los Angeles Times.

Connecticut Attorney General William Tong, who pushed for the divestiture of CNN and CBS News as a condition for approval, acknowledged the compromise fell short. “I’m not going to sugarcoat it. This is ultimately not what I wanted,” Tong said in an interview with the Los Angeles Times. “However, a week ago, they weren’t willing to do anything. … Their view was, ‘We’re buying it. We get to control it.’ … That’s what we were able to secure and it has to be all journalists on this five-person board.”

Tom Bettag, a former network news producer and lecturer at the University of Maryland, called the board “half-baked,” noting it “was formed up in haste,” according to the Los Angeles Times. The board is empowered to resolve disputes between news employees and management regarding “alleged reporting bias or failure to meet agreed upon reporting standards,” the agreement states.

**Political pressure shapes Bonta’s hand**

TheWrap reported that Bonta was forced to settle after losing the backing of key California political figures. California Governor Gavin Newsom, Los Angeles Mayor Karen Bass, and gubernatorial candidate Xavier Becerra all urged a settlement. A leaked report by the Los Angeles Economic Development Corporation estimated that Paramount moving out of the state could result in the loss of up to $21.2 billion in annual economic output, 57,980 full-time jobs, and $1.17 billion in state and local tax revenues. Ellison had made clear he was prepared to leave California, following his father Larry Ellison’s move of Oracle’s corporate headquarters from Silicon Valley to Austin, Texas, in 2020.

TheWrap quoted a source saying, “Bonta had no cards. At least he was smart enough to settle.” Hollywood guilds, studio CEOs and exhibitors pushed for a settlement, while opponents including actors Mark Ruffalo and Jane Fonda called for blocking the merger.

**Movie theater trade group applauds conditions**

Cinema United, which had opposed the merger from the outset, released a statement commending the settlement. President and CEO Michael O’Leary said in a statement reported by Deadline: “The consent decree includes language on increased film production for five years, meaningful theatrical exclusivity and wide distribution, prohibitions on cost increases, and continued access to the catalogs of Paramount and Warner Bros.”

The pact also requires a 45-day theatrical exclusivity window and a 90-day SVOD window, according to Cinema United, which had pushed for a prohibition on PVOD marketing prior to Day 30. The trade group had warned that a Paramount-Warner Bros merger could consolidate 40% of the box office in one studio, citing a 70% drop in box office at Disney after its Fox merger.

**Wall Street cautiously optimistic**

Analysts focused on Paramount’s $6 billion cost savings target and the combined company’s debt load, estimated at about $80 billion, according to the Nasdaq.com report. Michael Morris of Guggenheim Securities wrote in a note to clients cited by Deadline: “We view the combination as a ‘show me’ story.” He noted that a clause requiring separate pay-TV negotiations “constrains near-term networks synergy realization, though we do not expect it to alter the $6B run rate target.”

Morgan Stanley’s Sean Diffley, in a client note reported by Deadline, said the settlement “is a clear positive outcome for the pro-forma PSKY+WBD, in our view.” He sees the majority of savings coming from non-labor sources such as consolidating tech stacks and trimming real estate.

The ticking fee — about $7 million a day payable to WBD shareholders if the deal closes after October 1 — had hung over the stock, contributing to Monday’s decline, Deadline reported.

**Netflix seen as beneficiary**

A Nasdaq.com analysis suggested Netflix will benefit from the merger. “Netflix will face one less competitor following the merger, as Paramount+ and HBO Max will be combined into one streaming service,” the report noted. “Additionally, Paramount will have a debt burden of around $80 billion, weighing on its profits and restricting its ability to make other acquisitions.” Netflix stock rose 2% on Monday, the report said.

With the legal hurdle cleared, investor attention shifts to post-close execution, including the timeline for achieving cost savings and growing revenue. Paramount’s previous commitments to deliver mid-single-digit revenue growth and mid-20% EBITDA margins by the consent decree’s expiration in 2030 will be closely watched, analysts said.