David Ellison’s Paramount Skydance has cleared the last major regulatory obstacle to its $110 billion acquisition of Warner Bros. Discovery, putting the company on track to create one of Hollywood’s largest entertainment groups.
Paramount reached a settlement with 12 U.S. states that had sued to block the transaction, California Attorney General Rob Bonta announced Monday. The settlement removes the immediate threat of the antitrust case and allows Paramount to move toward closing the deal.
“We have complete clearance for this merger and can move toward closing,” Ellison said in a memo to employees obtained by Business Insider.
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Ellison said Paramount is tentatively planning to complete the acquisition in about two weeks.
The settlement includes several commitments aimed at addressing concerns about the effect of the merger on Hollywood’s movie production, theatrical distribution, television networks and news operations.
Under the agreement, Paramount will release at least 30 movies in theaters annually for the next two years, followed by at least 32 movies annually for the subsequent three years. At least 20% of those releases must qualify as “tentpoles,” defined as films with production budgets of at least $50 million, adjusted for inflation. Paramount also agreed to increase its U.S. production spending by at least $300 million annually for five years. The company pledged not to sell either its Paramount movie lot or the Warner Bros. lot.
The commitments address one of the central concerns raised by opponents of the transaction: that combining two major Hollywood studios could reduce the number of films produced and limit opportunities for filmmakers and other industry workers.
The settlement also covers news and cable television.
Paramount agreed to establish a board intended to support the continued editorial independence of CBS News and CNN and ensure what Bonta described as objective, fact-based reporting. The company will also negotiate carriage rates separately for Paramount’s existing cable networks and Warner Bros. Discovery’s networks for five years.
Paramount separately reached a settlement with the Writers Guild of America, which had also sued to stop the transaction.
A Hollywood Giant Takes Shape
The acquisition will dramatically expand Ellison’s media empire.
Paramount already owns Paramount Pictures, CBS, Paramount+, Pluto TV and cable networks including Comedy Central. Once the Warner Bros. Discovery transaction closes, it will also control Warner Bros. studio, HBO, HBO Max and major television networks including CNN, TBS and HGTV. The combined company will bring together two extensive film libraries, major television operations and competing streaming platforms at a time when traditional media companies are under pressure to achieve scale.
Paramount agreed in February to acquire WBD for $31 per share following a bidding contest that also involved Netflix. Netflix had proposed acquiring WBD’s studio and streaming assets for $27.75 per share.
Ellison has argued that combining the businesses will create a company with enough scale to compete more effectively with Netflix and Disney.
The transaction, however, has been closely scrutinized because of the amount of media content and distribution infrastructure that would come under one corporate owner. The 12-state lawsuit, filed alongside a separate case by the Writers Guild in July, argued that the merger would give Paramount excessive control over theatrical movies, major film productions and basic cable networks.
Paramount rejected those arguments, maintaining that the transaction would strengthen competition in the entertainment industry and benefit consumers. The company also pointed to approvals from other major regulatory authorities, including the U.S. Department of Justice.
The deal nevertheless suffered a significant setback in July when a federal judge granted plaintiffs a temporary restraining order, putting the transaction on hold.
The settlement now removes that immediate legal barrier.
Paramount was seeking to complete the transaction before the end of September. Under the agreement, failure to close by October 1 would have triggered a so-called ticking fee of about $7 million a day, or approximately $650 million per quarter, payable to WBD shareholders.
The settlement therefore does more than resolve a major legal threat. It also clears a path for Paramount to avoid a rapidly accumulating financial cost associated with delaying the transaction.
The Streaming And Cost Equation
The combination of Paramount+ and HBO Max is one of the most consequential elements of the transaction for consumers.
Paramount+ gives the company a large existing streaming operation, while HBO Max brings HBO’s premium programming and Warner Bros.’ extensive film and television library. Combining those assets could create a significantly broader streaming service capable of competing more directly with Netflix and Disney+.
But greater scale does not automatically translate into lower prices or a better consumer experience.
Mike Proulx, a media-focused research director at Forrester, said consumers are primarily concerned about what the merger means for their entertainment bills.
“Regulators spent months debating theatrical output, production commitments, and market structure,” Proulx said. “But consumers are simply asking, ‘Will this merger improve my entertainment experience without increasing my monthly bill?’”
That question could become more important once Paramount begins integrating the two companies.
The merger brings potential efficiencies through the combination of streaming operations, technology, marketing, content libraries, and corporate functions. At the same time, the two companies have overlapping businesses and large workforces, creating pressure to eliminate duplicated costs.
Inside Paramount, employees have previously expressed uncertainty about whether the acquisition would put jobs at risk or ultimately provide greater stability by giving the company more scale.
For Hollywood workers, the commitments on theatrical releases and U.S. production spending offer some near-term protection. Paramount’s agreement to maintain at least 30 theatrical releases annually, increase that number to 32 in later years, and spend an additional $300 million a year on U.S. production sets measurable obligations for the combined company.
The longer-term impact is expected to hinge on how Paramount balances those commitments against the economics of streaming. The company is inheriting a media landscape in which traditional television advertising is under pressure, cable subscriptions continue to decline, and streaming businesses are being pushed to demonstrate sustainable profitability rather than simply subscriber growth.
Warner Bros. Discovery brings valuable assets but also significant complexity. HBO, Warner Bros., CNN and the cable networks operate under different economic models, while Paramount has its own mix of broadcast television, film, streaming and cable businesses.
Ellison’s challenge after closing will likely shift from securing the transaction to integrating those assets while preserving the value of their individual brands.
Paramount is not simply acquiring Warner Bros. Discovery and inheriting its operations. It is entering the transaction with commitments covering theatrical output, domestic production, news governance, and cable-network negotiations.