5 minBusiness
Judge Approves Paramount-Warner Settlement, $81 Billion Merger Set to Close Oct. 6
A federal judge approved Paramount's settlement with 12 states, clearing the way for its $81 billion merger with Warner Bros. Discovery to close on Oct. 6. The deal combines two legacy Hollywood studios and adds CNN, HBO Max and CBS under one roof, despite criticism that the settlement terms are too weak.
A federal judge has approved Paramount's settlement with 12 states that had sued to block its $81 billion takeover of Warner Bros. Discovery, removing the final obstacle to a merger that will reshape Hollywood. U.S. District Judge Araceli Martínez-Olguín ruled Wednesday that the proposed consent decree was a «fair, reasonable, and good faith approach to address the competitive harms» alleged in the states' lawsuit. The companies now expect to complete the deal on Oct. 6.
The merger brings together two of Hollywood's last five legacy studios. It places HBO Max, whose library includes the «Harry Potter» franchise, and cable networks such as CNN under the same corporate roof as CBS, the «Top Gun» franchise and the Paramount+ streaming service. The combination further concentrates power in an industry already dominated by a handful of major players.
Paramount, which was acquired by Skydance last year, had called the antitrust challenge the last hurdle before closing. Shortly after the ruling, the company announced that Ynon Kreiz, currently chief executive of toy giant Mattel, will join as co-CEO alongside David Ellison. In a statement, Ellison described the merger as a «transformational moment for our industry» and said the two leaders would run a business that is «creator-first, tech-forward and built to scale globally.»
The settlement followed months of regulatory clearances worldwide, including from the Trump administration's Justice Department. But in July, top prosecutors from 12 states, led by California Attorney General Rob Bonta, sued to block the merger outright. They alleged that a Paramount-Warner combination would «extinguish competition» in Hollywood and leave consumers, particularly moviegoers and cable customers, with fewer choices.
Last week, the states agreed to settle those claims in exchange for new commitments from Paramount. The company pledged to increase U.S. film production spending by at least an additional $1.5 billion over the next five years and to release at least 30 films annually. Under the agreement, Paramount must distribute 30 films in theaters each year for the next two years and 32 films in each of the following three years. Only half of those films would have to be produced or co-produced by the combined company.
If Paramount fails to meet those output targets, it would have to divest from Miramax Studios and pay $30 million for each missed film into healthcare and retirement trust funds associated with the Writers Guild of America and other industry unions. The company also agreed to commit $47.5 million over five years, or $9.5 million annually, to fund training and career development for workers displaced by the merger. In addition, the settlement establishes new editorial monitoring of CNN and CBS.
Judge Martínez-Olguín did not immediately approve the terms. At a Thursday hearing, she said the court is not merely a «rubber stamp» for such settlements and allowed outside critics, including members of the Block the Merger coalition and the League of United Latin American Citizens, a brief window to voice opposition. She also instructed Paramount and the states to respond to concerns raised by Democratic Sen. Cory Booker. In her Wednesday order, she concluded that hopes for stronger terms «do not rise to the level of legal violations upon which the Court can reject the parties' negotiated resolution.»
The Writers Guild of America, which filed its own suit shortly after the states in July, also reached a settlement with Paramount last week, concluding it could not continue its legal fight alone. The Block the Merger coalition called the states' settlement a «toothless» deal. «In years to come, we'll be able to point to this failure to put consumers over the monied interests of corporate consolidation as the tipping-point moment for media in this country,» the group said. It added that if there is one benefit to the approval, it is that «people are now wide awake and paying attention — and their anger is not going to fade away.»
Before agreeing to settle, Bonta had said the states would consider only «robust» structural remedies. The final agreement relies mostly on behavioral requirements, with some court-enforceable penalties if Paramount breaks its promises. Most of the commitments last only five years. Paula Blizzard, an attorney for California, said at the hearing that the states settled on terms that did not «last forever» because the industry is changing, and that immediate divestments or a complete block could open the door to further acquisitions.
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