California Attorney General Rob Bonta and Paramount Skydance CEO David Ellison announced Monday they’ve reached a deal to end the state’s antitrust lawsuit, clearing the way for Ellison's $111-billion acquisition of Warner Bros. Discovery. The agreement settles claims Bonta and 11 other state attorneys general brought in July, an accord that has significant implications for Southern California's film industry and a few familiar studio lots.
Under the terms, Paramount has agreed to a series of conditions over the next five years, which are enforceable by the courts. The company will pay a penalty and has pledged to distribute 30 films per year in theaters for the first two years, increasing to 32 films annually for the subsequent three years. Should Paramount fall short of these theatrical release commitments, the Miramax film studio would have to be divested. The agreement also mandates an additional $300 million expenditure each year on U.S. film production, with further increases if a federal film tax credit of at least 20% is adopted.
Perhaps most notably for Southern California residents, Paramount has pledged not to sell or close its historic Melrose Avenue lot, nor Warner Bros.’ Burbank lot. The agreement specifies these properties must be operated "in a manner consistent with past practices." The company also committed to establishing a board to ensure editorial independence for CNN and CBS News, though the mechanism for enforcing its recommendations was not immediately clear. Additionally, the settlement includes a provision for Paramount to divest several cable channels — BET, VH1, Comedy Central, Smithsonian, Destination America, and Science — if it fails to separately negotiate basic channel agreements for Paramount and Warner Bros.
Despite reaching a settlement, Attorney General Bonta made it clear that this was not an endorsement of the merger itself. "This settlement is not a vote of support for this merger," Bonta said Monday, reiterating his belief that further consolidation "doesn’t serve the American economy, consumers or competition well." However, he noted that when a strong solution protecting competition and consumers can be found, he prefers to "resolve the case, the issue, in the boardroom instead of the courtroom."
David Ellison, for his part, expressed gratitude to Bonta and the other attorneys general for "engaging in good faith" to find a resolution, and thanked California Governor Gavin Newsom for his support. Ellison stated that their "shared aim was an outcome that best serves consumers, workers and — most importantly — the creative community so vital to the art of visual storytelling," adding confidence that the agreement achieves this.
The settlement was not without its critics. Alvaro Bedoya, a former commissioner at the Federal Trade Commission and a leader of the "Block the Merger" campaign, called it a "weak settlement that will be exceedingly difficult to enforce." Bedoya suggested that California’s state leaders had "caved to Paramount’s threat to leave California," a sentiment he described as a "loss" that "will be felt by the people who can least afford it."
The path to this resolution was, by all accounts, fraught. Bonta had abruptly canceled a negotiation session with Paramount in late August after potential deal terms leaked. Later, as the settlement took shape, attorneys general from New York and Connecticut reportedly signaled their displeasure, feeling the proposed terms didn't go far enough to mitigate the power of a combined entity.
Ellison was reportedly eager to finalize the takeover by the end of September, partly to avoid a "ticking fee" of 25 cents per quarter, per share, starting October 1, which was expected to add $7 million a day to the acquisition cost. Political pressure mounted, with Governor Newsom, Los Angeles Mayor Karen Bass, and California Governor nominee Xavier Becerra all pressing Bonta to settle the dispute rather than proceed to trial in Oakland. Newsom reportedly took Paramount's threat to leave the state "seriously," advocating for a settlement behind the scenes.
In a move that mirrors his father’s past corporate headquarters relocations, Ellison had threatened to move his studio from its historic Hollywood home on Melrose Avenue to Texas or Tennessee. However, late Monday afternoon, Ellison confirmed the combined company would maintain its base in Los Angeles. This comes after the Federal Communications Commission approved Paramount’s request for foreign investors to own nearly 50% of the merged company, with the Ellison family retaining voting control.
The merger, which is heavily leveraged with nearly $80 billion in debt, and backed by David Ellison’s father, billionaire Larry Ellison, as well as royal families from Saudi Arabia, Qatar, and Abu Dhabi, aims for more than $6 billion in cost cuts. A recent Los Angeles County economic report predicted this combination could lead to an estimated 4,500 workers in the Los Angeles region losing their jobs.
With clearances already secured from regulators in Europe, Canada, and the U.S. Justice Department, the final step for the merger is approval from a federal judge. Once that happens, Paramount will be poised to finalize its acquisition, combining two historic film studios with rights to franchises like Batman, Harry Potter, “Top Gun,” and Bugs Bunny, alongside streaming services HBO Max and Paramount+, and a host of cable channels including CNN, TBS, HGTV, Food Network, and Comedy Central.
