Paramount settles state antitrust suit, clearing path for $81B Warner merger

Newsom mediated as Paramount threatened to leave state

Paramount and a coalition of 12 state attorneys general reached a settlement Monday in the antitrust suit seeking to block the company’s $81 billion merger with Warner Bros. Discovery, ending a months-long legal standoff that had become the merger’s final regulatory hurdle.

Paramount Chief Executive David Ellison flew repeatedly between Los Angeles and Northern California in recent weeks to meet with California Attorney General Rob Bonta, his staff, and other attorneys general to finalize the terms, according to people familiar with the discussions. The settlement commits Paramount to new investments in domestic production and imposes penalties if the company does not meet certain commitments, but it spares Paramount the significant structural changes the states had initially demanded.

The agreement clears the way for a deal Ellison pursued even before his production company Skydance completed its own hard-fought battle to merge with Paramount in August 2025. It places Ellison, the scion of Oracle billionaire Larry Ellison, atop storied Hollywood studios, streaming services including HBO Max and Paramount+, and a roster of television channels.

Bonta, who led the state coalition that sued in July to block the transaction, said Monday he was satisfied with the concessions the attorneys general won on behalf of workers, but stressed the “settlement is not a vote of support for this merger.” Ellison thanked Bonta and Newsom. In a statement, he said the newly merged company would be based in Los Angeles. “We aren’t going anywhere,” Ellison said. Newsom called the agreement a “win for California workers and our creative economy.”

Financial pressure on Ellison had mounted. Paramount would have had to pay $650 million a quarter to Warner shareholders — about $7 million a day — starting Oct. 1 if the deal wasn’t closed. Bonta was under pressure, too. Paramount had threatened to leave its home state, which would be an economic and symbolic blow to a city already suffering from a leaner Hollywood. Paramount held talks with officials in Tennessee, people familiar with the discussions said.

In conversations with the attorney general, California Gov. Gavin Newsom reiterated concerns that losing Paramount would hurt the state’s economic engine. Newsom was concerned Bonta would lose at trial and at times acted as an unofficial mediator between the two sides, people familiar with the matter said.

Then, last week, Ellison made his biggest concession yet: to spend at least $1.5 billion more on domestic production over five years, people familiar with the offer said. He also agreed to commitments on the editorial independence of CBS and CNN, allocations for entertainment worker benefits, and the potential sale of cable channels.

Paramount expects to close the deal in about two weeks, people with knowledge of the timing said, mostly sparing it from the ticking fees.

The settlement stops short of the structural remedies the states had demanded. California and Connecticut pushed for the divestiture of cable channels including CNN, a step Paramount refused. While television ratings are broadly in decline, TV channels still contribute cash flow that would be key to paying down the nearly $80 billion debt load the combined company will carry. The parties ultimately agreed that Paramount might have to divest assets including some cable networks or its stake in Miramax if it doesn’t make good on promises such as negotiating the companies’ basic cable channel distribution separately and releasing at least 30 films a year.

New York Attorney General Letitia James, who sought protections for entertainment industry workers, met with Ellison on Friday. People familiar with the matter said James made her signature on the state coalition’s settlement contingent on getting a better deal for the Writers Guild of America, which had also sued to block the merger.

Ellison made repeated bids for Warner Bros. Discovery after his Skydance merger. His ninth offer, backed by the Ellison family, prevailed after Netflix walked away from a $72 billion deal to acquire Warner’s studio and HBO Max streaming business.

The Justice Department in June closed an investigation of Paramount’s Warner bid before career staffers who were concerned about the acquisition had an opportunity to object, The Wall Street Journal reported. Then, after weeks of speculation, Bonta sued to block the deal in July, along with the 11 other states. Later that month, the states secured a temporary restraining order preventing Paramount from closing.

Paramount agreed to halt the merger until legal challenges to the deal were resolved or June 1, 2027, whichever came first. Bonta declared victory. In an interview, Bonta said the states weren’t interested in potential remedies or asset spinoffs to avoid a nasty courtroom brawl. “We want no merger,” Bonta said.

Paramount, which saw its deal as pro-competition, didn’t see a need to make major changes, and the deal was stuck in limbo. Public lobbying turned political. Ellison, in a New York Times op-ed, said the states’ lawsuit wasn’t really about antitrust at all, but about whether he could be trusted with CNN. Ellison’s father is an ally of President Trump, and critics of the deal have suggested the family might interfere with coverage of the administration, allegations Ellison has denied. Bonta said the suit was a straightforward antitrust case, not about CNN.

Soon, Paramount indicated a willingness to make some concessions. At a Politico conference on Aug. 11, Paramount Chief Legal Officer Makan Delrahim said the company was considering all options. Bonta was adamant that a settlement would require structural changes. Pressure was growing on both sides, including from Newsom, Los Angeles Mayor Karen Bass, major movie theater chains, and entertainment industry labor unions. The Covid-19 pandemic, the 2023 strikes, and the flight of movie and TV production to other countries with generous government incentives had taken a toll on the entertainment industry.

Meanwhile, Ellison was discussing moving Paramount out of California starting Oct. 1 if there was no progress made toward a settlement. Bonta scrapped a planned August meeting between the two parties, accusing Paramount of failing to “maintain the confidentiality” of the gathering. Paramount said it had not been “the source of the leaks of any of our confidential discussions” and was ready to continue negotiations.

With court-mandated mediation scheduled for October, Ellison offered the investment in U.S. production. Bonta publicly remained steadfast in the face of Paramount’s threat to move. “If they make that choice to leave, that is their choice and their choice alone,” he said at The Atlantic Festival in New York Thursday.

As the two sides haggled, furor was growing among opponents of the merger, with activists including actor Mark Ruffalo on social media calling on Bonta to hold the line. Protesters gathered Sunday outside Bonta’s office to protest the looming settlement. On Sunday, Ellison called state attorneys general and their staffs to go over the deal.

While announcing the settlement Monday, Bonta talked about the long road to the settlement. “It’s a journey,” he said.