California Atty. Gen. Rob Bonta and Paramount Skydance Chief Executive David Ellison have reached an agreement to end the state’s antitrust fight, paving the way for Ellison to complete his $111-billion purchase of Warner Bros. Discovery, Bonta and Paramount confirmed Monday.
The two sides have agreed to resolve antitrust claims that Bonta and 11 other state attorneys general brought in late July. The agreement covers five years and is court-enforceable, Bonta’s office said.
As part of the deal, Paramount agreed to pay a penalty and to divest the Miramax film studio if the company fails to make good on a promise to distribute 30 films per year in theaters for the first two years of the combined company, and 32 films per year for the three years after that.
Paramount also pledged to spend $300 million more each year on film production in the U.S. and further boost its film spending if the federal government adopts a film tax credit of at least 20%.
The studio also pledged not to sell or close its Melrose Avenue lot or Warner Bros.’ Burbank lot and to operate them “in a manner consistent with past practices,” according to the consent decree.
Additionally, the settlement includes a requirement for Paramount to establish a board to ensure editorial independence for CNN and CBS News, though it was not clear how the board would be able to enforce its recommendations.
The agreement fell short of some of the changes Bonta had been pushing for, including requiring Paramount to divest some cable channels. However, if Paramount fails to meet its pledge to separately negotiate basic channel agreements for Paramount and Warner Bros., the company must divest BET, VH1, Comedy Central, Smithsonian, Destination America and Science.
“This settlement is not a vote of support for this merger,” Bonta said during a Monday morning news conference. “We believe further consolidation in markets that are central to American economic life doesn’t serve the American economy, consumers or competition well.”
But, he said, “when we can find a strong solution that protects competition and consumers, I’d rather resolve the case, the issue, in the boardroom instead of the courtroom, and that’s what happened here.”
Ellison said he was “grateful” to Bonta and the other states’ attorneys general for “engaging in good faith” to find a resolution and thanked California Gov. Gavin Newsom for his support.
“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,” he said in a statement. “We’re confident this agreement does exactly that.”
A federal judge must approve the agreement. Paramount would then be poised to quickly finalize its purchase of Warner Bros. Discovery — a blockbuster combination that will reshape Hollywood by combining two historic film studios with rights to Batman, Harry Potter, “Top Gun,” and Bugs Bunny and by combining the HBO Max and Paramount+ streaming services.
In addition to CBS, Paramount would own dozens of cable television channels, including CNN, TBS, HGTV, Food Network and Comedy Central.
Opponents of the merger said California’s state leaders caved to Paramount’s threat to leave California, resulting in a “weak settlement that will be exceedingly difficult to enforce,” said Alvaro Bedoya, a former commissioner at the Federal Trade Commission and senior advisor at the American Economic Liberties Project who was one of the leaders of the Block the Merger campaign.
“This did not have to happen,” he said in a statement. “Today is a loss, and that loss will be felt by the people who can least afford it.”
The road to a resolution was fraught. Bonta abruptly canceled a negotiation session with Paramount in late August after potential deal terms leaked. Then, after talks restarted and the settlement began taking shape, several powerful Bonta allies, including New York Atty. Gen. Letitia James and Connecticut Atty. Gen. William Tong, signaled their displeasure with proposed deal terms.
They felt the deal points didn’t go far enough to mitigate the potential clout Paramount would wield over the film and television industries if it were allowed to swallow its larger industry rival, said people familiar with the matter who were not authorized to comment.
Ellison’s goal had long been to complete the Warner takeover by the end of September — before midterm congressional elections and before a key deadline for Paramount to increase its payout to Warner Bros. Discovery shareholders. Ellison received a boost from Newsom, Los Angeles Mayor Karen Bass and Xavier Becerra, the Democratic nominee for California governor, who pressed Bonta to end the dispute rather than take the case to trial in Oakland in March.
Newsom said he took “seriously” Paramount’s threat to leave the state. He advocated for a settlement behind the scenes, according to two people close to the matter who were not authorized to comment.
The office of California Atty. Gen. Rob Bonta said the agreement covers five years and is court-enforceable. Above, Bonta at a news conference last year.
(Genaro Molina / Los Angeles Times)
Ellison was highly motivated to strike a deal . Beginning Oct. 1, Paramount is on the hook to pay Warner investors a “ticking fee” of 25 cents per quarter, per share until the deal closed. That obligation is expected to add $7 million a day to the cost of the $31 a share that Paramount agreed to pay Warner shareholders when it won the bidding war back in February.
Paramount’s takeover will be heavily leveraged. The company’s bankers have lined up nearly $80 billion in debt to finance the merger. Ellison’s father, billionaire Larry Ellison, late last year agreed to backstop the $47-billion in equity needed to complete the acquisition. Royal families from Saudi Arabia, Qatar and Abu Dhabi have agreed to chip in $24 billion for an equity stake by assuming some of Ellison’s financial commitments.
Late last week, the Federal Communications Commission approved Paramount’s request to allow the foreign investors to own nearly 50% of the merged company. The Ellison family, however, will retain voting control.
Paramount has promised Wall Street that it would make more than $6 billion in cost cuts. A recent Los Angeles County economic report predicted the combination of the two companies could lead to an estimated 4,500 workers in the Los Angeles region losing their jobs .
Paramount has already received clearances from regulators around the world, including the European Commission, Canada and the U.S. Justice Department.
But despite those approvals, Paramount spent weeks over the summer wrangling with Bonta and applying political pressure. Ellison threatened to move his studio from its historic Melrose Avenue address to Texas or Tennessee.
That echoed the actions of his father Larry Ellison, who in 2024 announced plans to switch the headquarters of his software behemoth Oracle to Nashville from Austin, Texas. It was previously based in Silicon Valley.
Paramount also enlisted the Directors Guild of America and the International Alliance of Theatrical Stage Employees, and prominent cinema chains to drop their opposition to the deal.
Bonta’s suit had leaned heavily into potential harms to theatrical distribution and lawyers for the states had been banking on theater executives’ testimony at trial.
The parties also were facing a key court hearing Thursday. Paramount was poised to ask U.S. District Judge Araceli Martínez-Olguín in Oakland to make the states and the Writers Guild of America post a $1.88-billion bond that would cover some of Paramount’s delay-related deal costs should the company eventually prevail.
The states and the WGA, which also sued to block the merger, balked at the request. On Monday, the WGA said it had settled its lawsuit after Paramount agreed to pay $17.5 million into the union’s health fund, along with their legal fees, and agreed not to lay off writers at CBS News Broadcast for five years.
“We continue to believe the merger will cause damage to writers and the industry at large,” the WGA said in a statement. The union said pursuing a complex antitrust lawsuit would it cost millions.
Paramount’s high-profile lobbying campaign reached a crescendo in late August after Paramount called out activist-actor Mark Ruffalo, accusing him of resorting to “antisemitic tropes” to argue against the merger.
Prominent Jewish groups rushed to Paramount’s aid. Ruffalo, who frequently works with HBO, denied the allegation, saying he had a 1st Amendment right to speak against the deal as well as Oracle’s business ties to Israel. Numerous Jewish artists came to Ruffalo’s defense, saying his free speech rights were being squelched.
Bonta abruptly canceled a settlement conference, accusing Paramount of leaking confidential information.
“If you want to have an adult, legitimate, serious settlement discussion — no problem,” Bonta said during an Aug. 25 appearance in Los Angeles. “But if you want to play games, we’ve got better things to do.”
The states’ 37-page lawsuit, filed in the U.S. District Court for Northern California, claimed the Paramount-Warner combination would violate the U.S. Clayton Act, a century-old antitrust law to prevent mergers that weaken competition and raise costs for consumers.
The states, which also included Nevada, Colorado, Oregon, Washington, New Jersey and New Mexico, had argued the tie-up of two legacy movie studios would give Paramount-Warner too much market share in two categories — wide-release movies and potential blockbusters.
Paramount Skydance Chief Executive David Ellison pressed to get his blockbuster deal done before his company had to make higher payouts to Warner Bros. Discovery shareholders and before the mid-term elections, which could change the makeup in Congress.
(Mark Schiefelbein / Associated Press)
The states also said Paramount-Warner would control nearly 30% of the cable television channel space with more than 50 networks.
Paramount has been facing a June 4 deadline to complete the deal — or owe Warner Bros. Discovery a $7-billion breakup fee. Paramount has already paid $2.8-billion to cover a termination fee paid to Netflix after the streamer withdrew from the auction in February.
