Paramount Nears Settlement in Warner Bros Merger Fight, But Some States Hold Out

Paramount Skydance is moving closer to a possible settlement with a group of US state attorneys general challenging its proposed acquisition of Warner Bros. Discovery, but disagreements among some of the states could still prevent an agreement from being reached.

The $110 billion merger has been tied up in an antitrust lawsuit filed in July by a coalition of 12 Democratic state attorneys general. California Attorney General Rob Bonta has been leading the coalition, but recent negotiations between Paramount and the states have reportedly made progress.

According to people familiar with the negotiations cited by CNN, Bonta has been pushing toward a settlement in recent days. However, New York Attorney General Letitia James and Connecticut Attorney General William Tong are among those who have not yet agreed to the emerging terms, with the holdouts seeking additional protections.

James is reportedly seeking stronger safeguards for workers, while Tong has raised concerns about preserving the editorial independence of CNN and CBS News. The negotiations are confidential and could still change.

The proposed merger would bring major entertainment and media assets under one company, including Paramount’s film and television operations and Warner Bros. Discovery properties such as HBO, CNN, CBS, TBS and the Warner Bros. studios.

The state attorneys general sued to block the transaction, arguing that the combination would reduce competition in the film and television industries. New York’s attorney general said when the lawsuit was filed that the merger could harm workers, consumers and businesses.

Paramount has been seeking a resolution before the financial pressure surrounding the transaction increases. The company has agreed to delay the closing of the merger until five days after a court ruling in the antitrust case or June 1, 2027, whichever comes first.

Another deadline is approaching on October 1, when Paramount is expected to begin facing a $7 million-a-day ticking fee if the merger has not closed. The company has also asked a federal court to require the states and the Writers Guild of America to post a bond of about $1.9 billion to cover costs associated with the delay. A hearing on that request is scheduled for September 24.

Paramount CEO David Ellison has also threatened to begin moving the company’s operations out of California if an agreement is not reached. The potential departure has triggered concern among California officials and entertainment-industry groups because of the economic importance of film and television production to the state.

The latest negotiations have not ended the legal challenge. CNN reported that Connecticut and at least two other states also have reservations about the proposed settlement and are seeking additional remedies from Paramount.

The dispute therefore remains dependent on whether the 12 states can agree on common terms. Bloomberg Law reported that any settlement would likely require the support of all 12 states, as well as the Writers Guild of America, which has a separate lawsuit challenging the transaction.

The Federal Communications Commission and Justice Department have already taken steps clearing other regulatory hurdles for the transaction. The FCC approved the foreign-investment aspects of the deal on September 17, while the merger remains blocked by the states’ litigation.

If Paramount and the states fail to settle, the antitrust dispute is expected to proceed toward trial, leaving the future of the proposed Warner Bros. Discovery takeover uncertain.