The proposed $110 billion merger between Paramount Skydance and Warner Bros Discovery has moved closer to completion after Paramount reached a settlement with a coalition of US states that had challenged the deal on competition concerns.
The agreement removes one of the biggest legal obstacles facing the merger, which is expected to reshape Hollywood by combining two major entertainment groups with powerful film studios, television networks and streaming businesses.
California led the legal challenge along with other states, arguing that the deal needed stronger safeguards to protect competition, workers and consumers.
As part of the agreement, Paramount has accepted several conditions before completing the merger.
Key commitments include:
• Produce at least 30 films every year
• Ensure a fixed percentage of film production takes place in the US
• Maintain safeguards against low-quality AI-generated films being used to meet production targets
• Create an independent board to oversee editorial standards at CBS News and CNN
• Appoint an independent monitor to ensure compliance with settlement terms
The agreement requires Paramount to ensure at least 20% of film production takes place in the US during the first two years. This requirement will increase to more than 30% over the following three years.
Authorities have included strict enforcement measures to ensure Paramount follows the production commitments.
If the company fails to meet the annual film production requirements, it could be forced to sell its 49% stake in Miramax, the film company founded by Harvey Weinstein and Bob Weinstein.
California officials said the production commitments were designed to increase domestic filmmaking activity and create more jobs in the entertainment sector.
The settlement also addresses concerns over media independence following the merger. Paramount has agreed to establish a “news editorial independence board” for CNN and CBS News.
The board will:
• Be created within 180 days after the merger is completed
• Include five current or former journalists with at least 10 years of experience
• Review disputes involving alleged reporting bias or concerns over editorial standards
Paramount CEO David Ellison has said journalists would continue to operate independently and follow facts rather than political interests.
Despite the settlement, the Writers Guild of America (WGA) remains critical of the merger.
The union has argued that the deal could negatively affect writers and the broader creative industry. However, it ended its legal challenge, saying it did not have enough financial resources to continue fighting the merger without government support.
Under the agreement:
• Paramount will contribute $17.5 million to the WGA health fund
• The company will cover legal expenses
• Writer layoffs at CBS News Broadcast will be restricted for five years
Supporters of the deal argue that the merger could boost film production, create jobs and strengthen Hollywood’s global competitiveness.
California officials estimated that the agreement could generate hundreds of millions of dollars in additional economic activity for the US film and television industry.
However, some industry professionals have raised concerns that large-scale consolidation could lead to cost-cutting, fewer opportunities for workers and greater control being concentrated among a smaller number of companies.
With the state lawsuit settled, Paramount and Warner Bros Discovery have cleared one of the final major hurdles before completing the merger.
If completed, the deal will create one of the world’s largest entertainment companies, combining iconic film brands, streaming platforms and television networks under a single corporate umbrella.
