Paramount Warner Bros deal | Lawsuit with US states settled, making merger almost certain

A $110bn merger now looks like a certainty, as Paramount has settled a lawsuit blocking its Warner Bros deal.

That was sudden. Roughly eight weeks after a coalition of US states successfully sued to block Paramount’s $110bn takeover of Warner Bros, the lawsuit has been settled.

It ends weeks of stasis, and threats from Paramount Skydance boss David Ellison to move his entire operation out of California if the deal didn’t complete by the 30th September.

Originally, the case wasn’t due to be heard by the courts until March 2027, by which point Paramount would have racked up penalty charges of $1.2bn.

Instead, Paramount has come to a settlement with the 12 US states who brought the lawsuit, and led by California Attorney General Rob Bonta.

Under the terms of the new agreement, hashed out behind closed doors over the past few days, Paramount has committed to producing 30 films, every year, for the next five years. There are also rules put in place that disallow those films from being rushed into production through the use of AI; budgets must be kept above $50m, and the resulting films will need to be released in cinemas on a minimum of 3,000 screens.

There are also guardrails in place relating to the editorial oversight of the news outlets that will be under Paramount-Warner Bros’ control, such as CBS News and CNN. You can read the full Consent Decree, to give it its full name, on the US government’s website.

The settlement is, of course good news for Paramount. David Ellison has said that the merged corporation would be “pro-competitive, pro-consumer and pro-worker” in a statement.

For opponents of the deal, however, the settlement marks what is likely the point of no return. The US Department of Justice waved the deal through earlier this year, and so barring a last-minute upset, the merger will happen within months.

Read more: Warner Bros | A brief history of terrible corporate mergers

Those against the merger have argued that it will result in fewer job opportunities and less diversity in an already shrinking Hollywood industry. A cursory glance at recent corporate history shows that such mergers can result in thousands of job losses, as merged firms look around for places to cut expenditure.

It’s a gloomy story all the way around. On Monday (21st September), Rob Bonta cut a lonely figure as he held a press conference announcing the settlement. He repeatedly stressed that “I don’t think these two companies should merge” according to The Hollywood Reporter, but said that the deal would ultimately increase Hollywood film production.

The Writer Guild of America has said, according to the BBC, that the merger “will cause damage to writers and the industry at large.” But it added that, because it’s a non-profit and fighting a massive corporation, it simply couldn’t afford to keep fighting its case in court.

The settlement has also been subject to criticisms: in his press conference, Bonta said that there was nothing in it that guaranteed that Paramount wouldn’t still move its business to another US state.

“It’s not part of the deal,” he said.