Paramount settles state lawsuit blocking $110B Warner Bros. Discovery merger

Paramount has reached a settlement with California and 11 other states that sued to block its planned $110 billion acquisition of Warner Bros. Discovery. The agreement removes a major roadblock to the media merger and comes just days before a ticking fee would have begun costing Paramount about $7 million per day past September 30.

The settlement resolves an antitrust lawsuit filed in July. California, New York, Washington, Arizona, Colorado and other states alleged the deal would create a media behemoth inflicting substantial harm on the entertainment industry. A federal judge had paused the merger following the suit.

The states secured commitments including independent editorial boards for CNN and CBS, according to Bloomberg. The deal also includes a pledge of 30 or more films annually with a $30 million penalty per film for any shortfall, multiple outlets report.

Paramount commits to expanded film production spending. The company agreed to spend $1.5 billion on film production in Hollywood over the next five years, the Los Angeles Times reports. It may also sell a stake in Miramax if production targets are missed, Bloomberg reports.

Paramount Chairman and CEO David Ellison said the parties engaged in good faith to reach a resolution serving consumers, workers and the creative community. "We're confident this agreement does exactly that, memorializing a series of commitments that include 30+ films annually and expanded U.S. film production to help revitalize our industry here at home," Ellison stated.

Ellison added that the deal received unanimous approval from competition authorities in nearly 70 jurisdictions worldwide. "Having now addressed the State AGs’ and WGA’s concerns, we have complete clearance for this merger," he said. The WGA challenge remains unresolved, Reuters reports.

A federal judge must still approve the settlement. The merger is poised to finalize quickly after that approval. Shares of Paramount rose more than 8 percent while Warner Bros. Discovery shares gained more than 10 percent on the news.