Politicians and rank-and-file workers who feared a Paramount-Warner Bros. Discovery deal now hope concessions in a settlement with state attorneys general will soften the impact

Warner Bros. Discovery (WBD) and Paramount Skydance (PSKY) stocks surged 7% and 5% respectively on Monday following reports of a potential merger settlement agreement. The outcome of this proposed deal could see Paramount facing financial penalties if it fails to release a minimum of 30 films in theaters annually. For every film short of this target, Paramount would be required to pay a $30 million fee.

Additionally, they may be compelled to sell their 49% stake in Miramax should they not meet the release quota. This agreement comes after twelve Democratic state attorneys general, along with the Writers Guild of America, sued the deal on antitrust grounds, contending that the merger would grant Paramount excessive control over the film and cable television industries.

The talks between Paramount and California Attorney General Rob Bonta have been intensified in recent days, although a final agreement has yet to be finalized. Paramount's acquisition of Warner Bros. Discovery was initially initiated in response to a bidding war with Netflix, who had previously submitted an offer. Warner shareholders had previously approved Paramount's revised bid in April, with the deal valued at around $111 billion, including debt.

This acquisition would significantly expand the entertainment portfolio under the control of Paramount's CEO, David Ellison, the son of Oracle co-founder Larry Ellison.