Paramount settles with states over Warner Bros Discovery deal

Investing.com -- Paramount Skydance reached a settlement on Monday with California and 11 other states that had filed a lawsuit to block its $110 billion acquisition of Warner Bros Discovery. The agreement clears a path for one of the largest media mergers in history.

The settlement requires Paramount to increase domestic film production spending by at least $300 million annually and progressively raise its film output after the deal closes, California Attorney General Rob Bonta said during a press conference.

The company will produce 30 movies in each of the first two years following the deal's completion, and 32 movies in each of the subsequent three years, Bonta said. At least four films must be independent productions each year, and at least 20% must be blockbusters.

Paramount will also create a news editorial independence board to protect editorial independence at CBS and CNN networks under the settlement terms, Bonta said.

Paramount stock was trading roughly 1.5% higher following the announcement, giving back most of early gains when shares were up as much as 10% after reports of setlement first surfaced. Warner Bros. was trading over 11% higher

The agreement ends months of regulatory and legal challenges to a deal that would concentrate control across Hollywood's film, television, streaming and news operations.

The settlement with the states helps Paramount avoid a $7 million daily "ticking fee" owed to Warner Bros shareholders for each day the deal remains unclosed past September 30.

The Writers Guild of America, which had also filed a lawsuit to stop the deal over concerns about decreased pay and worsened working conditions for film and television writers, reached a settlement with Paramount, Bloomberg reported earlier.

The union stated in July that a combined Paramount-Warner Bros entity would have the incentive and ability to lower costs by reducing writers' wages and cutting output.

The settlement includes a $17.5 million healthcare fund and protections for workers at CBS and CNN, the report said.

Antitrust regulators in the European Union and Britain have already approved the deal.

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