Judge Clears Paramount-Warner Settlement, $81B Merger to Close Oct. 6

A federal judge has approved Paramount's antitrust settlement with 12 states, clearing the way for the $81 billion megamerger with Warner Bros. Discovery to close on Oct. 6.

U.S. District Judge Araceli Martínez-Olguín ruled Wednesday that the proposed consent decree was a "fair, reasonable, and good faith approach to address the competitive harms" alleged in the states' lawsuit. Paramount, which Skydance bought just last year, had called the antitrust challenge the last hurdle before closing the Warner deal.

Shortly after the ruling Wednesday afternoon, Paramount announced that Ynon Kreiz — currently chief executive of Mattel — will join as co-CEO alongside David Ellison. In a statement, Ellison called the merger a "transformational moment for our industry" and said he and Kreiz will lead a business that is "creator-first, tech-forward and built to scale globally."

The combination brings together two of Hollywood's last five legacy studios. HBO Max, a library that includes the "Harry Potter" franchise and cable networks such as CNN will sit under the same roof as CBS, the "Top Gun" franchise and the Paramount+ streaming service. That further concentrates power in an industry already run by a handful of major players — and critics of the settlement argue the terms are too weak.

The final antitrust fight

Paramount had secured clearances from regulators worldwide in recent months, including the Trump administration's Justice Department. But in July, top prosecutors from 12 states — led by California Attorney General Rob Bonta — sued to block the merger altogether. They alleged a Paramount-Warner combination would "extinguish competition" in Hollywood and leave fewer choices for consumers, particularly moviegoers and cable customers.

Last week, the states settled those claims in exchange for new commitments from Paramount: increased U.S. film production over five years, millions of dollars for a fund supporting workers displaced by the merger, and new editorial monitoring of CNN and CBS.

Martínez-Olguín did not sign off immediately. At a Thursday hearing, she maintained the court is not a "rubber stamp" for a settlement of this kind and said she, like many others, had questions. She granted outside critics — including members of the Block The Merger coalition and the League of United Latin American Citizens — a brief window to voice opposition, and instructed Paramount and the states to respond to concerns raised by Democratic Sen. Cory Booker.

By Wednesday's order, though, she concluded that hopes for stronger terms "do not rise to the level of legal violations upon which the Court can reject the parties' negotiated resolution."

The Writers Guild of America, which filed its own suit shortly after the states in July, also settled with Paramount last week — concluding it could not continue the legal fight alone.

The terms on paper

The settlement outlines behavioral requirements, not structural ones, with some potential "court enforceable" penalties if Paramount breaks its promises. Most commitments last only five years.

Paula Blizzard, an attorney for California, said at Thursday's hearing that the states settled on terms that didn't "last forever" because the industry is changing — while immediate divestments, or the outright blocking they initially demanded, could open the door to further acquisitions.

The concrete obligations include at least $1.5 billion in additional U.S. film production spending over five years. Paramount must distribute 30 films in theaters each year for the next two years, and 32 films in each of the three years after that. The fine print requires only 50% of those movies to be "produced or jointly produced" by the combined company. If Paramount misses those output targets, it must divest Miramax Studios and pay $30 million per missed film toward healthcare and retirement trust funds tied to the Writers Guild of America and other industry unions.

Paramount also committed $47.5 million — $9.5 million a year — over five years to fund training and career development for workers displaced by the merger. On cable, the settlement orders the company to negotiate deals for current Paramount-owned and Warner-owned basic cable channels separately for five years; a court may order divestments if Paramount violates those terms.

The company must also form a "News Editorial Independence Board" to monitor news operations at CBS and CNN within 180 days of closing. Court documents say the body will consist of five "active or retired" journalists with at least 10 years of experience, all appointed by — and reporting to — the combined company's board of directors for three-year terms. Ellison, who is Paramount's current chairman, remains in the top spot after the acquisition closes.

Ongoing criticism

The Block the Merger coalition on Wednesday called the states' settlement "toothless."

"In years to come, we'll be able to point to this failure to put consumers over the monied interests of corporate consolidation as the tipping-point moment for media in this country," the group said in a statement. But, it added, "if there is one discernible benefit to the approval of this corporate takeover, it's that people are now wide awake and paying attention — and their anger is not going to fade away."

Colorado and Washington joined the wider settlement but declined to sign the editorial board terms. Connecticut Attorney General William Tong, who had wanted a full divestiture of CNN and CBS, said last week he wished the deal could have gone further.

Including billions of dollars in debt, Paramount's buyout of Warner is valued at about $111 billion based on outstanding shares. The combined company will now test whether five-year behavioral commitments can hold together an entertainment giant that regulators, unions and advocacy groups spent months trying to stop.