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Paramount Skydance and a coalition of state attorneys general spent the weekend hammering out the details of a settlement that could finally clear the way for the company’s massive acquisition of Warner Bros. Discovery, with a proposed $1.5 billion investment in California film and television production emerging as one of the central concessions on the table. People familiar with the discussions told the Wall Street Journal that a deal could come together as soon as this week, potentially resolving one of the last major obstacles standing between Paramount and a transaction that would combine HBO, CBS, CNN, multiple streaming services and two of Hollywood’s most storied film studios under single ownership.
The lawsuit driving these negotiations was filed in July by a coalition of 12 Democratic-led states, led by California Attorney General Rob Bonta, seeking to block the deal on antitrust and public interest grounds. According to the SEC filing announcing the original merger agreement, the transaction values Warner Bros. Discovery at an enterprise value of $110 billion, representing a multiple of 7.5 times the company’s fully synergized 2026 EBITDA, funded in part by $47 billion in new Paramount Class B shares backed by a fully committed investment from the Ellison family and RedBird Capital Partners. The deal’s financial architecture rests substantially on a personal guarantee from Larry Ellison, the Oracle co-founder and father of Paramount Skydance CEO David Ellison, who pledged to personally stand behind the billions in equity needed to close the acquisition.
The $1.5 billion production investment represents just one piece of a broader package of concessions under discussion. According to reporting from Kanebridge News, the parties have also discussed a commitment from Paramount not to sell either studio’s physical lot and to maintain ongoing operations within California, a notable pledge given that the company had previously explored relocating out of state entirely while the merger faced political opposition. That willingness to consider leaving California appears to have been a significant pressure point in the negotiations, since keeping major studio production and the jobs that come with it inside the state has been a priority for California officials throughout the legal challenge.
Beyond the California-specific commitments, the settlement talks have also addressed enforcement mechanisms tied to promises Paramount made earlier in the merger process. The company had previously pledged to produce a minimum of 30 theatrical films annually following the merger, a commitment explicitly outlined in the original transaction filing as part of the deal’s stated rationale around driving long-term job growth across the film and creative industries. Negotiators have reportedly discussed specific penalties should Paramount fail to meet that annual production target, including a provision that could force the company to divest its stake in Miramax, the studio behind acclaimed films including “No Country for Old Men” and “Pulp Fiction,” according to people familiar with the discussions cited by Kanebridge News.
CNN’s editorial independence has emerged as another significant sticking point in the negotiations, reflecting concerns that have followed the deal since it was first proposed. The parties have discussed creating a dedicated board structure specifically intended to preserve CNN’s editorial independence once it comes under Paramount Skydance ownership, a measure that sources say Paramount had actually begun discussing internally even before the states filed their lawsuit. CNN has functioned as something of a political flashpoint throughout David Ellison’s yearlong effort to acquire Warner Bros. Discovery, given the network’s high public profile and the scrutiny that typically accompanies any change in ownership of a major national news organization. Additional concessions reportedly under consideration include the potential sale of certain cable channels as part of the broader settlement package.
Financial markets have responded favorably to signs that a settlement may be close. According to CNBC, Paramount’s shares rose nearly 7 percent after markets closed following reports that a deal could be reached as soon as this weekend, while Warner Bros. Discovery shares climbed 8.4 percent in after-hours trading on the same news. That market reaction reflects just how significant this particular legal challenge has been viewed within the broader deal, with the states’ lawsuit representing one of the final substantial hurdles standing between Paramount and its ambition to become a major competitor to Netflix and Walt Disney in the streaming and entertainment landscape.
The ownership structure underlying the merger adds another layer of complexity to why regulatory approval has mattered so intensely to Paramount. Beyond the state-level antitrust challenge, the transaction required separate federal approval because it alters ownership of CBS, which holds federal broadcast licenses for more than two dozen television stations across the country, including major outlets serving Los Angeles. That regulatory dimension runs alongside the state-level settlement talks, meaning Paramount has had to navigate scrutiny on multiple fronts simultaneously even as it works to finalize terms with California and the other states involved in the lawsuit.
As of this reporting, no final agreement has been reached, and it remains unclear precisely which terms the parties will ultimately settle on before any deal is formally announced. Given how close the two sides reportedly came to an agreement over the weekend, and the strong positive market reaction already visible in both companies’ share prices, a resolution in the coming days appears increasingly likely, though the specific mix of concessions, particularly around the Miramax divestiture penalty and the structure of CNN’s editorial oversight board, could still shift before any settlement becomes final. Continuing coverage of how major media mergers are navigating regulatory and legal challenges is available on Business Tech. Additional detail on the original transaction terms is available through Warner Bros. Discovery’s SEC filings, and further reporting on the settlement talks can be found through CNBC’s coverage of the negotiations.
