States Reach Settlement Imposing Five-Year Conditions on Paramount–Skydance–Warner Bros. Discovery Merger

California Attorney General Rob Bonta and 11 other state attorneys general have agreed to settle their antitrust lawsuit challenging the Paramount Skydance-Warner Bros. Discovery merger, clearing a path for the deal to move forward if a federal court approves a proposed consent decree imposing five years of enforceable conditions on the combined company.

The proposed settlement, filed Monday in the U.S. District Court for the Northern District of California, would require minimum annual film releases, at least $1.5 billion in additional U.S. production spending over five years, a $47.5 million fund for workers displaced by the merger, separate negotiations for Paramount and Warner basic cable channels, and oversight by an independent monitor.

The agreement resolves a 12-state case that had already halted the merger from closing. California led the coalition, joined by Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington. The states sued in July, arguing the merger would reduce competition by lowering output and raising prices, harming workers and consumers. On July 20, a federal judge issued a temporary restraining order blocking the companies from closing the deal while the case proceeded. The settlement, in Case No. 4:26-cv-07116-AMO, still requires court approval.

At the center of the decree are detailed output requirements aimed at preventing the combined company from cutting back on movie releases after the merger. The company would have to release at least 30 films a year in the first two years, including 20 wide releases, then at least 32 films a year in years three through five, including 21 wide releases. It also would be required to release at least four independent films each year.

The decree pairs those release floors with a domestic production commitment. The merged company would have to spend at least an additional $1.5 billion on U.S. production over five years above 2025 levels. For workers affected by consolidation, it would have to create a $47.5 million workforce fund over five years for training and career development for employees displaced by the merger.

The settlement also includes support for independent film. The company would be required to establish an Independent Film Fund with $5 million a year for five years, or $25 million total, to buy independent films.

Another major provision targets cable carriage negotiations, where the states had warned that combining major channel portfolios could give the company more leverage to demand higher fees. For five years, the merged company would have to negotiate Paramount basic cable channels separately from Warner basic cable channels instead of bundling them together. The states said that condition is intended to preserve competition and help limit consumer price increases.

The proposed decree includes unusually sharp penalties if the company falls short. If it misses the annual film-output requirement and does not cure the shortfall within the allowed period, it would have to divest Miramax. It also would have to pay $30 million for each missed film into funds benefiting union health and retirement trusts, the Motion Picture & Television Fund, and antitrust enforcement.

Beyond the core antitrust terms, the settlement adds several media and consumer safeguards. The company would have to continue operating a free ad-supported streaming service such as Pluto TV and maintain its service quality during the five-year commitment period. It also would have to create a News Editorial Independence Board for CNN and CBS News.

Bonta said the state agreement was designed to address competition concerns rather than bless the underlying transaction. “This settlement is not a vote of support for this merger,” he said in a statement. He said the states focused on “consistent film output, domestic production, and protecting the livelihoods of workers above and below the line.”

Some entertainment unions and guilds praised the settlement’s production and labor terms, including the Directors Guild of America, IATSE, Teamsters, LiUNA and SAG-AFTRA leadership, according to the California attorney general’s office.

The case also underscores a rare split between federal and state antitrust enforcers. The U.S. Justice Department closed its own antitrust investigation of the merger on June 12, saying it was not likely to find competitive harm. California and the other states pressed ahead anyway, won a court order pausing the deal, and have now agreed to let it proceed only under court-enforceable conditions.