Paramount clears final legal hurdle in $110 billion Warner Bros. Discovery takeover

A federal judge cleared the last major legal obstacle to Paramount Skydance Corporation's $110 billion takeover of Warner Bros. Discovery on Wednesday, entering a settlement between the companies and a 12-state coalition that had sued to block the merger on antitrust grounds. Paramount and Warner Bros. Discovery said they now expect to close the deal on Oct. 6, combining CBS, CNN, Paramount Pictures, HBO Max, MTV and Warner Bros. under a single owner in one of the largest media mergers in American history.

The order, issued by the U.S. District Court for the Northern District of California, formally resolved a lawsuit the states filed in July accusing the merger of threatening to "substantially lessen competition" in film, television and cable markets. In a filing with the Securities and Exchange Commission, Paramount Skydance disclosed that the court's Sept. 30 order both entered the consent decree the parties had negotiated and modified an earlier no-close order that had barred the companies from completing the transaction.

The numbers

Under the terms first struck in February, Warner Bros. Discovery shareholders are to receive $31.00 in cash for each share they hold, plus a small daily "ticking" payment that began accruing after Sept. 30 to compensate them for the delay, according to the proxy statement Warner Bros. Discovery filed with securities regulators ahead of the shareholder vote that approved the deal in April. The settlement itself carries its own price tag: Paramount and Warner Bros. Discovery agreed to spend at least $300 million more per year, or $1.5 billion over five years, on domestic production beyond their combined 2025 levels, to maintain a minimum theatrical release slate of 30 films annually rising to 32 by the third year, and to spend $9.5 million a year for five years — $47.5 million in all — on workforce training, career-development programs and community arts organizations. The companies also agreed to reimburse the states' legal costs, capped at $40 million.

How the deal got here

Paramount Skydance and Warner Bros. Discovery signed their merger agreement on Feb. 27, after Warner Bros. Discovery's board determined Paramount's offer topped a rival bid from Netflix. Warner Bros. Discovery shareholders approved the transaction in April, but opposition from state regulators soon followed. California Attorney General Rob Bonta led a coalition of a dozen states — including New York, New Jersey, Massachusetts and Connecticut — that sued in July under Section 7 of the Clayton Act, arguing the combination would concentrate too much control over Hollywood production and cable distribution in one company. A separate suit followed from the Writers Guild of America, which raised similar competition concerns on behalf of its members. A judge granted the states a temporary restraining order that summer, and Paramount agreed at one point not to close the deal until five days after a final ruling on the merits or June 1, 2027 — whichever came first, a timeline that threatened to keep the merger in limbo for the better part of a year.

That changed on Sept. 21, when Paramount and Warner Bros. Discovery reached settlements with both the states and the Writers Guild, agreeing to dismiss both suits in exchange for a package of enforceable commitments. The announcement from the California attorney general's office came after weeks of on-again, off-again negotiations, during which Bonta at one point canceled a planned meeting with Paramount's negotiators. The parties then jointly asked the court to enter the consent decree, a request the judge granted nine days later.

What Paramount promised

The commitments, laid out in a lengthy consent decree filed with the court, run for five years after closing. The combined company must release at least four independent films annually, keep new releases in theaters for at least 45 days before they reach a streaming service, and negotiate affiliation agreements for its basic cable channels — including BET, Comedy Central and VH1 — separately rather than bundling them with other leverage. It must also maintain Pluto TV as a free, ad-supported streaming service and cannot sell either the Paramount or Warner Bros. studio lots. Failing to meet the annual film-release targets triggers escalating penalties, starting with a $30 million payment per missed film and ultimately requiring the company to divest Miramax Studios if the shortfall is not cured within six months. Within 180 days of closing, the combined entity must also stand up a five-member News Editorial Independence Board of working journalists empowered to resolve disputes over the editorial independence of CBS News and CNN — a provision aimed at the states' concerns that a single owner might otherwise influence both networks' coverage.

Separately, Paramount agreed to resolve the Writers Guild of America's lawsuit by making a one-time $17.5 million contribution to the union's health fund within a week of closing, paying up to $6 million of the union's legal costs, and maintaining its current headcount of union-represented staff at CBS News for the length of the commitment period.

Who is affected

The settlement did not satisfy every state that sued. Connecticut Attorney General William Tong said his office had pushed for a more sweeping remedy and came away disappointed that Paramount would retain ownership of both CNN and CBS News rather than sell one or both outright.

"I am deeply disappointed that we could not do more," Tong said, adding that Connecticut had "fought aggressively" for a full divestiture of the two news organizations to protect their editorial independence, according to an account of the settlement.

Bonta, by contrast, defended the outcome as the best available remedy short of a drawn-out trial, saying the deal "resolves our antitrust concerns" while stopping short of an endorsement of the merger itself. Sen. Elizabeth Warren was more critical, calling the settlement "a disastrous outcome" that would let what she described as a Trump-aligned conglomerate dominate American news and entertainment.

Inside the companies, the settlement ends months of uncertainty for employees across CBS, Paramount Pictures, Warner Bros., CNN, HBO Max, Discovery and more than a dozen cable networks who had been waiting to learn whether, and when, the two media giants would actually combine. Warner Bros. Discovery Chief Executive David Zaslav could collect close to $887 million in equity, cash and related payouts once the deal closes, under a compensation arrangement the company disclosed in its merger proxy statement. Paramount Skydance CEO David Ellison told employees in a memo after the September settlement that "we have complete clearance for this merger and can move toward closing," while cautioning that "closing is really just the starting line" for integrating two companies of this size, according to reporting on the staff memo.

What happens next

With the court order in hand, Paramount and Warner Bros. Discovery are proceeding toward an anticipated closing date of Oct. 6, more than seven months after the deal was first announced. Closing will not end the scrutiny: an independent monitoring trustee and an internal compliance monitor are required to track Paramount's adherence to the film-release, production-spending and editorial-independence commitments for five years, with semiannual reports due to the states. Any failure to comply carries financial penalties or, in the case of the film commitments and certain cable-channel provisions, the threat of forced divestitures. For now, the immediate task facing Ellison and his management team is a more conventional one: folding a global media company with roughly 35,500 employees, as of Warner Bros. Discovery's most recent annual report, into Paramount's existing operations while trying to keep both the box office and the newsroom commitments it just signed.