Paramount settles with US states in big step towards closing Warner Bros merger, source says

Paramount and Skydance have reached a settlement with California and 11 other U.S. states over their $110 billion acquisition of Warner Bros Discovery, a source revealed on Monday. This milestone brings the companies closer to finalizing a merger that would reshape Hollywood's media and entertainment landscape. In the settlement, Paramount has agreed to establish independent editorial boards for CNN and CBS, as well as pay a $30 million penalty per film if it fails to meet its pledge of releasing 30 movies annually.

The source did not immediately provide comment on the settlement for Paramount, Warner Bros Discovery, or California Attorney General Rob Bonta's office. The agreement follows months of regulatory and legal battles over the deal, which critics argue would concentrate power within the film, TV, streaming, and news industries. The settlement addresses some of these concerns, potentially leading to a closure of the merger, which will create one of the world's largest media and entertainment groups.

Paramount's shares increased by more than 5% on Monday, while Warner Bros Discovery surged over 10%. While the deal has received clearance from U.S. regulators, a coalition of 12 state attorneys general, led by California's Rob Bonta, had sued to block it, citing worries over reduced competition and the creation of a dominant media entity.

The merger still faces obstacles, including a lawsuit from the Writers Guild of America, which claims the deal would lower wages and working conditions for writers. Despite this, a cleared Paramount-Warner deal could signal a more accepting stance towards media consolidation by regulators, as companies strive to compete with streaming giants like Netflix and Disney.