Paramount Skydance has resolved legal action brought by a coalition of 12 US states, removing the final regulatory obstacle to its $110bn (£82.8bn) combination with Warner Bros Discovery. California Attorney General Rob Bonta announced the settlement on 21 September 2026, stating that state officials had negotiated enforceable commitments designed to safeguard competitive dynamics across film, television, and broadcasting sectors. The deal had faced mounting legal challenges since the states initially sued in July 2026, arguing that combining two of Hollywood's five remaining legacy studios would harm consumers and reduce creative opportunities.
Bonta emphasized the limited scope of the state's endorsement.
"The settlement is not a vote of support for this merger. It is not a blessing of the broader merger,"he said.
"Broadly speaking, we believe further consolidation in markets that are essential to American economic life doesn't serve the American economy, consumers or competition well."
Four states—Massachusetts, New York, Connecticut and Minnesota—held out on a deal until the weekend before the announcement, according to reporting on the negotiations. The settlement represents a compromise between state regulators and the companies involved, and resolves concerns that had threatened to derail one of the entertainment industry's largest proposed transactions.
What commitments did Paramount make?
Under the settlement terms, Paramount has agreed to maintain robust film production activity in the United States. The studio must release a minimum of 30 films annually for the first two years following the merger and 32 films annually for the three years thereafter, with financial penalties if it fails to meet these quotas. Additionally, Paramount committed to spending at least $300m in domestic production, with $1.5bn in Hollywood production over five years, according to reporting on the settlement terms. Bonta indicated that this commitment would contribute to strengthening film production capacity domestically and create additional jobs and economic activity.
Paramount also agreed that CBS and CNN would maintain independent editorial boards under the merger, and will not be required to sell its cable channels—which include CBS, MTV, Nickelodeon and Showtime—as had been discussed in earlier negotiations. A trustee will be selected jointly by the parties to monitor Paramount's compliance with the settlement terms, with the authority to pursue court action if the company fails to comply.
What does this mean for the merger?
The resolution effectively removes the final regulatory barrier to completing the transaction. The US Department of Justice had previously approved the deal in June 2026, and Warner Bros Discovery shareholders had voted in favor in April 2026. The state settlement now provides what company leadership describes as complete clearance to proceed, though a federal judge must still approve the settlement before the merger can fully proceed.
David Ellison, Paramount's chief executive and owner, welcomed the outcome in a statement.
"Our shared aim was an outcome that best serves consumers, workers and—most importantly—the creative community so vital to the art of visual storytelling,"Ellison said.
"Having now addressed the State AGs' and WGA's concerns, we have complete clearance for this merger and look forward to putting these commitments into action."He added that he was grateful to Bonta, other state attorneys general and California Governor Gavin Newsom for
"engaging in good faith to find a path forward to a resolution."
Ellison reiterated his message that the merger would be
"pro-competitive, pro-consumer and pro-worker,"stating that
"our goal has always been to build a stronger Hollywood—one with more stories told, greater choice for consumers and stronger competition. Bringing Paramount and Warner Bros. Discovery together will build that stronger Hollywood, creating expanded opportunity for our people and even more great entertainment for audiences around the world."Ellison had previously signaled his willingness to relocate studio operations outside California if state regulators continued to obstruct the transaction, a position that may have influenced the negotiation dynamics.
What happens next?
Although the settlement removes the state-level legal obstacle, a federal judge must still approve the settlement before the merger can fully proceed. Paramount faces a critical deadline of 30 September 2026; according to reporting on the deal terms, the company would owe a $7 million daily "ticking fee" to Warner shareholders if the merger remains unfinished after that date. The settlement establishes enforceable obligations regarding film production volume, theatrical release quotas, and competitive practices that will govern the merged entity's operations going forward, with ongoing monitoring and enforcement by state regulators.
Key Facts
- Paramount agreed to release at least 30 films annually for two years and 32 films annually for three years following the merger, with financial penalties for non-compliance
- The company committed to $1.5bn in Hollywood production over five years and $300m in domestic production spending
- CBS and CNN will maintain independent editorial boards to address concerns about editorial independence
- A court-appointed trustee will monitor compliance with settlement terms
- Federal judicial approval is still required before the merger can close
