Shares of Paramount Skydance and Warner Bros. Discovery rallied 10% each during Monday’s trading session after the David Ellison-led media giant and 12 state attorneys general settled an antitrust lawsuit against the pending $110 billion merger.
The agreement, which is expected to be announced later on Monday, is an attempt to address concerns that the combination of the two historic studios would create a dominant force in the theatrical film and cable channel markets and have a devastating impact on the entertainment industry. Paramount has insisted the deal would lead to more opportunities and give it a better fighting chance against the tech giants.
The David Ellison-led media giant previously pledged to release 30 films theatrically per year, but California Attorney General Rob Bonta called on Paramount to deliver “structural” remedies, such as divestments of cable channels. Other terms that were under discussion over the weekend included a separation of the two companies’ studios for a period of time and safeguards for CNN and CBS News’ editorial independence.
The final terms of the settlement could not immediately be learned, but the company will reportedly avoid having to sell cable networks and may face financial penalties if it fails to reach the 30 theatrical film release goal.
Representatives for Paramount and Bonta did not immediately return TheWrap’s request for comment. News of the settlement talks were first reported by Bloomberg and The Wall Street Journal.
The move comes as the David Ellison-led media giant was gearing up for a March trial against the state AGs and the Writers’ Guild of America. Paramount had agreed to delay the closing until five days after the outcome of the trial, or June 1, 2027, whichever came earliest.
But starting Oct. 1, Paramount was also on the hook to start accruing a 25 cent per share ticking fee, which would’ve translated to a payout of $650 million per quarter or $7 million per day until closing, giving it extra motivation to settle quickly. Ellison had threatened to begin the process of moving Paramount’s operations out of California if a settlement wasn’t reached by the Oct. 1 deadline.
The Los Angeles Economic Development Corporation estimated that Paramount moving out of the state could’ve resulted 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.
Meanwhile, an analysis ordered by the LA County Board of Supervisors estimates that the merger closing could put 4,500 local TV and film jobs and over 5,800 indirect or induced jobs from related small businesses at risk over the next three years. The economic impact of losing these jobs would be $1.26 billion in wages, $2.78 billion in economic value, $4.06 billion in total business output and $547 million in tax revenue, including $78.6 million in local taxes — most of which (63%) comes from property taxes.
The resolution comes after Paramount already received clearance from Warner Bros. shareholders and regulators and governments representing 68 jurisdictions, including the U.S. Department of Justice and Federal Communications Commission, the European Commission and the United Kingdom’s Competition and Markets Authority.
Among those who publicly called for a settlement were California Gov. Gavin Newsom, Los Angeles Mayor Karen Bass and the Democratic nominee in California’s gubernatorial race Xavier Becerra, the Directors’ Guild of America and IATSE.
Cinemark and the CEOs of AMC Theaters and Regal came out in support of the merger, as did Lionsgate CEO Jon Feltheimer. Meanwhile, over 5,000 actors, including prominent names like Jane Fonda, Mark Ruffalo and hundreds of other A-listers, penned a letter opposing the merger. Also speaking out against the merger was SAG-AFTRA and Hollywood’s Teamsters union.
In addition to state AGs and the WGA, a Paramount shareholder and group of consumers filed a lawsuits to block the merger, though the latter was dismissed.
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