Paramount, Warner Bros. shares rally on report of merger settlement agreement

Warner Bros. Discovery (WBD) and Paramount Skydance (PSKY) stocks surged by 7% and 5% respectively on Monday following reports of a potential merger settlement agreement. The deal would see Paramount agreeing to pay $30 million per film if the combined entity fails to release at least 30 theatrical releases annually. Paramount could also be compelled to divest its 49% stake in Miramax.

California officials previously sought to block the $111 billion acquisition on antitrust grounds, citing the deal's potential to grant Paramount excessive control over the film and cable television industries. The merger discussions have intensified between Paramount and California Attorney General Rob Bonta, though a finalized agreement remains elusive.

The acquisition, which was ultimately approved by Warner shareholders in April, aims to bolster Paramount's creative portfolio under CEO David Ellison's leadership.