David Ellison’s Paramount Skydance has cleared the last major hurdle to closing its $110 billion merger with Warner Bros. Discovery.
Paramount has settled the antitrust lawsuit brought by 12 states, California’s Attorney General Rob Bonta announced on Monday.
“We have complete clearance for this merger and can move toward closing,” Ellison said in a Monday memo to staffers, obtained by Business Insider.
A key part of the settlement: Bonta said Paramount agreed to release 30 movies in theaters each of the next two years, followed by 32 movies in each of the next three. At least 20% must be “tentpoles,” defined as movies with a budget of at least $50 million (adjusted for inflation).
If Paramount doesn’t meet its annual film release commitments, it will have to pay $30 million per movie. It will also be given six additional months to meet the quota, after which it will be forced to divest the film studio Miramax.
Bonta said that Paramount agreed to increase its production spending in the US by at least $300 million a year for the next five years. He added that Paramount had pledged not to sell either its movie lot or the Warner Bros. lot.
Bonta said that as part of the settlement, Paramount would establish a board to support CBS News and CNN’s continued editorial independence and ensure objective, fact-based reporting. Paramount will also negotiate rates separately for its own cable TV networks and those owned by WBD for the next five years.
Paramount settled a separate lawsuit brought by the Writers Guild of America, the WGA said Monday.
Ellison said in his Monday memo that Paramount is “tentatively planning” to complete its acquisition of WBD in “approximately two weeks.”
Buying WBD will create the Hollywood behemoth that Ellison, Paramount’s CEO, believes will have the size and strength to compete with giants like Netflix and Disney.
Ellison’s Paramount will soon control the Warner Bros. studio, HBO, HBO Max, and TV networks CNN, TBS, and HGTV. The 114-year-old media company already owns the Paramount Pictures studio, CBS, streaming services Paramount+ and Pluto TV, and cable networks like Comedy Central.
In February, Paramount agreed to buy WBD for $31 per share. The agreement followed a monthslong bidding war with Netflix, which had planned to buy WBD’s studio and streaming assets for $27.75 per share.
Paramount was pushing to close the WBD deal by the end of September to avoid paying WBD shareholders a so-called “ticking fee” of about $7 million per day, or $650 million per quarter, which it would have owed starting on October 1 if its deal wasn’t finalized.
Ellison’s company suffered a setback in July when 12 US states and the Writers Guild of America sued to block the acquisition, arguing that the merger would give Paramount too much power over the distribution of theatrical movies, big-budget films, and basic cable channels.
Paramount denied those claims and said its deal would improve competition in Hollywood and benefit consumers, while noting that the deal had been approved by every other major regulatory authority, including the US Department of Justice.
High-profile actors and directors like Mark Ruffalo and JJ Abrams also opposed the Paramount-WBD deal, saying in an open letter that consolidation would result in “fewer opportunities for creators.”
In July, a federal judge granted the plaintiffs in the antitrust case a temporary restraining order, which put the deal on pause.
Paramount then agreed not to close its WBD deal until either June 1, 2027, or five days after the resolution of the antitrust cases, whichever came first. The trial was set to begin in early March.
Inside Paramount, employees previously told Business Insider they were torn about whether a deal with WBD would put their jobs at risk or keep them safe as their company grew stronger and better positioned to compete with streaming giants.
Pairing Paramount+ with HBO Max would create a larger streamer with far more content, though consumers are concerned it could lead to higher prices, said Mike Proulx, a media-focused research director at Forrester.
“Regulators spent months debating theatrical output, production commitments, and market structure,” Proulx said. “But consumers are simply asking, ‘Will this merger improve my entertainment experience without increasing my monthly bill?'”
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