Paramount settles state antitrust suit, clearing the way for its $110 billion Warner Bros. deal

Paramount Skydance has reached a settlement with the group of state attorneys general who sued to stop its acquisition of Warner Bros. Discovery, according to reports on Monday from Bloomberg, Reuters, The Wall Street Journal and The New York Times. The deal, valued at about $110 billion by CNBC, had already won approval from federal and international regulators. The state case was the last big obstacle.

Full terms have not been made public, and neither Paramount nor California Attorney General Rob Bonta's office had commented when CNBC published.

What the settlement reportedly includes

• A movie output pledge with a penalty. Paramount would pay $30 million for each film it falls short of a commitment to release 30 movies a year, according to sources cited by both Reuters and Bloomberg.
• Miramax. Bloomberg's sources said Paramount could be forced to sell its 49% stake in Miramax if it misses that target, Yahoo Finance reported.
• Newsroom independence. Reuters' sources said the agreement creates independent editorial boards for CNN and CBS.

California and 11 other states filed the suit in mid-July, citing competition concerns in film and pay TV. Bloomberg reported that four holdout states, Massachusetts, New York, Connecticut and Minnesota, worked over the weekend to join the settlement first outlined with California.

Why the timing mattered to shareholders

Without a settlement the case was headed for a trial in March, which would have left the merger in limbo until mid-2027. That would have been expensive for Paramount. Under the merger agreement, a ticking fee starts after September 30: an extra 25 cents per share, per quarter, paid to Warner Bros. Discovery shareholders until the deal closes. CNBC estimated that at about $650 million in added cash value each quarter.

Paramount had told investors it expected to close by September 30. A settlement now makes that date, or something close to it, realistic again, and limits how much of the ticking fee comes into play.

How the stocks reacted

At about 11:51 a.m. New York time, Nasdaq data showed Warner Bros. Discovery at $30.55, up 9.9%, and Paramount Skydance at $11.32, up 10.8%. Both stocks were already higher before the opening bell on the first reports.

What it means

The combined company would own two major film studios, the CBS broadcast network, a large group of cable networks including CNN, and two streaming services, Paramount+ and HBO Max. CNBC said the merger will create the largest portfolio of TV networks in the U.S.

For businesses that buy advertising, a single owner of that many channels and two streaming platforms means more of the national TV and streaming ad market sits with one seller. The film output pledge is aimed at the other side of the business: theater owners had worried that a merged studio would release fewer movies.

What to watch next is the formal announcement and court filing, which should confirm the terms, and whether Paramount sets a new closing date.

Sources: CNBC, CNBC live markets coverage, Yahoo Finance, reporting by Reuters, Bloomberg, The Wall Street Journal and The New York Times, Nasdaq quote data. This is market information, not investment advice.