Paramount has come to an agreement with California Attorney General Rob Bonta regarding a multi-state antitrust lawsuit, which clears the way for its significant $81 billion merger with Warner Bros. Discovery, as reported by sources.
This morning, around 10:20 a.m. ET, shares of Paramount and Warner Bros. Discovery saw notable increases, with gains of 6.6% and 9.8% respectively, following news that settlement discussions over the weekend were fruitful.
The terms of the settlement reportedly involve a commitment to produce 30 movies annually, a promise to stay in California for multiple years—after previously suggesting a move out—and the establishment of independent editorial boards for both CBS News and CNN, according to sources.
The Wall Street Journal mentioned possible concessions, including a $1.5 billion investment in California’s production sector and penalties for Paramount if they fail to uphold their 30-film commitment, which could include selling Miramax, known for classics like “Pulp Fiction.”
Sources indicated that a key factor influencing the settlement was New York Attorney General Letitia James agreeing to collaborate. James represents many New Yorkers employed by Paramount and Warner Bros., and she’s currently in her re-election campaign.
States like Massachusetts, Connecticut, and Minnesota opposed the merger as well, but decided against continuing their legal opposition when they realized it wouldn’t be worth it if California was supportive of the deal, as Bloomberg reported.
Neither Paramount nor Bonta provided immediate comments on the matter.
Previously, President Trump’s Department of Justice approved the merger, which aims to unify HBO Max, Paramount+, HBO, CBS, CNN, and a multitude of film titles under one roof, led by David Ellison, the son of Oracle billionaire and Trump supporter Larry Ellison.
In July, Bonta, alongside 12 state attorneys general, filed an antitrust lawsuit trying to block the merger. They claimed it would likely lead to increased prices for consumers, less content in film and television, and job losses.
Moreover, the Writers Guild of America also filed a lawsuit to halt the merger, arguing it would cut jobs for Hollywood screenwriters.
Recently, Bonta had been speeding up efforts to finalize a deal outside of court, worried that Paramount might actually proceed with its threats to leave California, which could jeopardize thousands of jobs and approximately $21 billion in yearly economic activity.
If a settlement hadn’t been reached, the trial was scheduled to start next March in California, which could delay or derail the merger since a costly “ticking fee” would begin on October 1.
This fee, outlined in the agreement, stipulated that Paramount would need to pay Warner shareholders about $650 million each quarter, or around $7 million daily, until the merger completed.
Paramount also requested that a federal judge require the states and the Writers Guild to post a bond of about $1.9 billion, which would go to Paramount if they succeeded against the lawsuit.
Despite Bonta being at the forefront of the lawsuit, other California officials have been urging him to reach a resolution due to the potential fallout if the deal collapses.
California Governor Gavin Newsom reportedly cautioned that state employment could be adversely affected if the merger is unsuccessful in court. Meanwhile, Los Angeles Mayor Karen Bass expressed her determination last week, stating she will “fight like hell” to safeguard production in the city.
