Paramount Settles State Lawsuits, Clearing Path for $110bn Warner Bros Deal

Paramount Skydance has settled lawsuits with a dozen US states, removing one of the last obstacles to its $110bn (£82.8bn) merger with Warner Bros Discovery.

The settlement carries hard conditions. Paramount must release at least 30 films each year and guarantee that a share of production stays in the United States — or face penalties that include forced divestiture. If the studio misses its annual quota, it must sell its 49% stake in Miramax, the film company founded by Harvey and Bob Weinstein.

California Attorney General Rob Bonta, who led the legal push alongside attorneys general from Arizona, Colorado and New Jersey, said the agreement was "not a vote of support for this merger." He argued the deal turned what could have been a "falling off the cliff in domestic production into a huge increase," delivering more movies, jobs and economic activity.

Bonta put a number on it: economic activity would be "$300m to $1.5bn more, at minimum, for film and TV production right here in our country." "Importantly, that is the baseline. That is the minimum," he said, adding that production commitments could surge by up to 700% if Congress passes a federal film tax credit.

Under the deal's initial terms, Paramount must ensure 20% of all film production takes place in the US for the first two years, rising to over 30% over the following three years. To stop the studio from padding its quota with cheap content, Bonta said the settlement includes strict guardrails against "AI-generated" films. Officials wanted "real, robust movies" that generate economic activity and put people back to work, he said.

Paramount has also agreed to appoint an independent monitor to oversee ongoing compliance.

Editorial independence board

The settlement requires Paramount to establish a "news editorial independence board" within 180 days of the merger completing, charged with ensuring "independent, objective, fact-based reporting" at CBS News and CNN, the Warner Bros Discovery network recently banned from the White House by President Donald Trump. CNN, along with MS Now and Politico, has sued the Trump administration over the ban. Trump has accused them of writing "fiction or lies" about his time in office.

The board must include five acting or retired journalists with at least a decade of experience. It will resolve "any disputes between CBS News employees, CNN employees, and management of the combined entity regarding alleged reporting bias or failure to meet agreed reporting fairness standards," the settlement said.

Paramount chair and chief executive David Ellison — who hosted a dinner for Trump earlier this year — has sought to reassure critics that editorial independence will survive the merger. In an August op-ed for the New York Times, he wrote that he had voted for both Republican and Democrat candidates, and that if the merger went ahead, "journalists will continue to answer to the facts and to all the people they serve - not to any party or cause."

Announcing the settlement, Ellison said the concerns of the state attorneys general and the Writers Guild of America (WGA) had been addressed. "We have complete clearance for this merger and look forward to putting these commitments into action," he said. "Our shared aim was an outcome that best serves consumers, workers and - most importantly - the creative community so vital to the art of visual storytelling."

WGA settlement

The WGA remains unconvinced. The guild said it continues to believe the deal "will cause damage to writers and the industry at large." It said it was forced to settle its own lawsuit because, as a non-profit, it could not afford to fight the merger alone without government support.

The studio will pay $17.5m into the WGA health fund, cover legal fees, and prohibit writer layoffs at CBS News Broadcast for five years.

Rank-and-file industry workers are skeptical too. Ned Thorne, an LA-based film editor, described the merger as "a little unsettling." He told the BBC World Business Report podcast: "When two giant companies consolidate into one it's never a totally positive thing because of the merger and cost cutting. Whilst I know this might on somebody's ledger be a great idea, it's so far out of the hands of ordinary folks on the ground that it's a case of who's really going to be benefitting apart from a group of shareholders."

What is not in the deal

One commitment is missing from the legal text. Ellison had previously indicated the merged company would keep its headquarters in California for the foreseeable future — after earlier threatening to move studio operations out of the state — but Bonta clarified that the headquarters pledge carries no legal weight. "It's not part of the deal," Bonta said.

The settlement clears the way for a merger set to reshape Hollywood by combining legacy studios, major streamers and national networks. Whether it delivers the production quotas, jobs and editorial safeguards now written into the agreement — and whether the promised federal film tax credit materializes — will determine how much of Bonta's $1.5bn baseline projection the combined company actually delivers.