Paramount Can Buy Warner After States Take a Film Quota

Paramount Skydance settled a 12-state antitrust suit on September 21, clearing the last major legal bar to its $110 billion Warner Bros. Discovery purchase. California Attorney General Rob Bonta, who led the coalition, said the pact is a settlement that resolves our antitrust concerns in every market the states pleaded, and is not a vote of support for the merger.

A federal judge still has to enter the consent decree. Paramount chief executive David Ellison told staff he now has “complete clearance” and is tentatively planning to close in about two weeks. Warner Bros. Discovery chief executive David Zaslav told staffers in a memo that he expects the combination no later than early October.

Twelve States Traded a Block for a Five-Year Quota

The states sued on July 13 in the U.S. District Court for the Northern District of California, asking Judge Araceli Martínez-Olguín to stop a combination they said would wipe out a century of rivalry between two of Hollywood’s five major film distributors and two of the five major basic-cable owners. Bonta’s complaint put the combined share at about 27% of wide-release theatrical distribution and about 27% of basic-cable channel licensing, two different markets with the same headline figure, and said three remaining distributors would then control 75% of those wide theatrical titles.

Paramount and Warner Bros. Discovery have denied any law was broken. The proposed decree says the companies are settling to avoid the cost, delay, and uncertainty of a trial that had been set for early March, after they had already agreed not to close while the case was live, or until June 1, 2027, whichever came first.

Bonta was blunt that the paper does not bless the marriage. Crews, directors, and Teamsters got volume they can count. The writers’ guild did not, and Connecticut did not get the news sale it asked for.

This settlement is not a vote of support for this merger. But we believe this settlement, which resolves our antitrust concerns in every market alleged in our case, protects competition and consumer choice, and puts workers’ needs, concerns, and futures first, is the best course of action.

Rob Bonta, California Attorney General, Los Angeles press conference, September 21, 2026

The companies announced the merger agreement on February 27. Ellison said competition authorities in nearly 70 jurisdictions had already cleared it. The states and the Writers Guild of America were the holdouts. On September 21 both of those fights ended in settlements, and the injunction path that would have run into 2027 closed with them.

30 Films a Year, Then 32

The spine of the decree is a theatrical floor. If the deal closes in 2026, the five commitment years are 2027 through 2031. The combined company must put 30 films a year for the first two years into U.S. theaters, then 32 a year for the next three. At least 20 of the first-band titles have to open on 2,000 or more screens; that wide-release floor rises to 21 when the slate moves to 32. At least four titles each year must be independent films, defined as original screenplays or pictures that did not start at the combined company, Disney, Universal, or Sony. At least half the counted films must be produced or jointly produced by the combined company.

THE FIVE-YEAR SLATE

On top of the headcount, at least 20% of each year’s films must carry production and acquisition budgets of at least $50 million (in September 2026 dollars, later adjusted for inflation) and open on 3,000 domestic screens within the first four weekends. Each counted film has to be at least 75 minutes, keep a 45-day theatrical window, skip streaming ads until day 30, and stay off subscription video-on-demand, including Paramount+, for 90 days. Exhibitor rental terms stay at least as good as the better of the two studios’ pre-close schedules for three years.

HOW A TITLE GETS COUNTED

• Limited runs: A picture on fewer than 600 U.S. screens does not count unless it expands to 1,000 screens within 30 days.
• Reissues: Re-releases, commemorative editions, and repackaged old titles do not count.
• The miss penalty: Each shortfall costs $30 million, with 50% going to union health and retirement funds, 40% to the Motion Picture & Television Fund, and 10% to a national attorneys general antitrust fund, even if the studio later makes up the title.
• The hostage: After a six-month cure window, a year that still misses the floor forces a sale of Miramax, and the company cannot buy it back during the commitment period.

The spend floor is separate. Paramount must put at least $1.5 billion more into U.S. film production over five years than the two companies spent in 2025, which is $300 million extra each year. Bonta’s office said only about 5% of Paramount’s production is in the United States now. If Congress passes a federal film tax credit of at least 20%, U.S. production-day levels must rise to 20% of the slate in the first two years and 30% in the last three, and to 40% if California or New York also passes a broader state credit. A $5 million-a-year independent-film purchase fund, $25 million over the term, starts within 30 days of closing.

Ellison had already talked up a 30-picture combined slate. The decree turns that talking point into a court order, then adds the 32-picture step-up, the screen floors, the window rules, and a sale of Miramax if the factory misses. For theater owners and below-the-line crews, that is a number they can audit. It is also a substitute for the thing the lawsuit said would be lost: two studios bidding against each other for screens, dates, and crews.

What the Writers Guild Took to Drop Its Suit

The Writers Guild of America East and West filed their own case on July 14, a day after the states, and in July they helped put the merger on hold pending court action or June 1, 2027. The guild’s fact sheet said a combined Paramount-Warner would be the largest buyer of original film and television programming in the United States, with more than 30% of several writer-services markets and concentration jumps of more than 400 points, and up to more than 700, on the government’s HHI scale.

When the states settled, the guild settled too. Paramount will pay $17.5 million into the WGA health fund, cover the guild’s legal fees, and bar writer layoffs at CBS News Broadcast for five years. That freeze does not cover the rest of the writing workforce the guild said the merger would squeeze.

We continue to believe the merger will cause damage to writers and the industry at large. Now that the Attorneys General have settled with Paramount, however, as a nonprofit, the WGA must contend with the reality of forging ahead alone, with no backing from government enforcers, with a complex antitrust lawsuit that would cost millions of dollars to pursue through trial.

Writers Guild of America East and West, joint statement, September 21, 2026

IATSE International President Matthew D. Loeb thanked Bonta for “protections for workers, enforceable safeguards and other important commitments.” Directors Guild of America National Executive Director Russell Hollander said the decree “brings clarity and stability to the industry during a period of decreased production.” Teamsters General President Sean M. O’Brien and SAG-AFTRA’s Sean Astin and Duncan Crabtree-Ireland also welcomed pieces of the labor language. The merged company must honor existing U.S. collective bargaining agreements, bargain in good faith on successors, and put $47.5 million over five years into a workforce fund for training and career development for people displaced by the merger.

The split is the point of the settlement’s design. Crews and directors got a film factory they can measure. Writers got a health-fund check and a narrow newsroom freeze, then said out loud that they walked because they could not pay for a solo antitrust trial.

Paramount’s Board Will Pick the CNN Watchdogs

The news remedy is thinner than a split, and it is the clause that most clearly shows what the states could not extract. Within 180 days of closing, the combined company must set up a News Editorial Independence Board for CBS News and CNN: five established journalists, active or retired, each with at least ten years in the craft and three years of credentials. No more than two may be tied to the same political party. No government official may sit on it or approve its members, and no Paramount officer, director, shareholder, or non-journalist employee may serve.

The combined company’s own board of directors appoints those five people, can remove them only for good cause, and hears from them through the chief compliance officer. The panel is supposed to write guiding principles from the two newsrooms’ existing standards, hear disputes over alleged bias or fairness failures, and watch editorial independence from ownership and shareholders. Its reach is limited to news made mainly for the United States.

WHERE THE NEWS REMEDY SPLITS

• California’s line: Bonta lists the board as a guardrail that helps CNN and CBS keep editorial independence after they share an owner.
• Connecticut’s line: Attorney General William Tong said his state wanted and demanded full divestiture of CNN and CBS News, fought for that sale, and is “deeply disappointed that we could not do more.”
• The press group’s line: Freedom of the Press Foundation chief of advocacy Seth Stern called a Paramount-appointed board “worthless,” arguing the buyer still holds the newsrooms.

Tong said that a week before the settlement, Paramount had refused any editorial-independence term, and that the federal government’s decision not to sue left the states “with one arm tied behind our backs.” He still claims the board “will meaningfully help” and will be enforceable under the decree. The design answers him only halfway. The watchdog exists on paper. The people who staff it are chosen by the same board that will own both networks.

Cable Channels Must Bargain as if They Were Still Rivals

The original complaint treated basic cable as a second place where the merger would raise prices, because distributors could no longer play Paramount’s channels against Warner’s. The decree does not force a sale of CNN, TNT, MTV, or the rest of the portfolios at closing. For five years the combined company must negotiate Paramount basic-cable affiliation deals separately from Warner Bros. basic-cable deals, keep the existing renegotiation calendars unless a distributor asks in writing to change them, and refrain from tying one bundle to the other or using one side’s confidential affiliate-fee data on the other side. Premium channels, streaming, and broadcast sit outside that wall.

If the company is found to have broken those rules and fails to cure in six months, it must sell a defined set of channels: BET (including its sister brands), VH1, Comedy Central, Smithsonian, Destination America, and Science. Those are the assets on the block for a cable breach. They are not the marquee news and film brands the states originally tried to wall off. Distributors that want a joint negotiation can request one in writing; Paramount may not solicit that request or condition other terms on it. The company must also keep a free, ad-supported streamer under the Pluto TV name, or a successor of like quality, at or above service levels on the decree’s effective date.

Melrose and Burbank Stay Open for Five Years

The location fight sat just off the antitrust docket. Paramount had floated moving work out of California while the suit dragged and a daily fee loomed. The decree answers that threat with a map. For the commitment period the combined company shall not sell or close the Paramount lot at 5555 Melrose Avenue in Los Angeles or the Warner Bros. lot at 4000 Warner Boulevard in Burbank, and it must use commercially reasonable efforts to run both as it has, including third-party leases and film and television production. Pre-close studio-development contracts in the plaintiff states must be honored.

WHAT ELSE THE DECREE LOCKS IN

• The lots: Melrose and Burbank stay open for five years, with past-practice operations the baseline.
• The free streamer: Pluto TV, or an equivalent replacement, stays free and ad-supported at current quality.
• The state bill: Paramount and Warner Bros. Discovery will reimburse the 12 states for reasonable attorneys’ and economic-expert fees, capped at $40 million.
• The watchers: An independent compliance monitor and a committee of no more than five of the plaintiff attorneys general oversee the term.

Bonta’s coalition is California plus Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington. Warner Bros. Discovery’s equity value in the transaction has been put at about $81 billion, with the $110 billion figure the states used taking in the wider enterprise value. The purchase still folds Warner Bros., HBO, and CNN into Paramount’s film and television studios, CBS, and Paramount+.

A Judge and an October Fee Still Stand in the Way

Ellison’s “complete clearance” line runs ahead of the docket. The decree is proposed. Martínez-Olguín has to enter it. Until she does, the settlement is a signed bargain, not an order. Paramount had agreed not to close while the states’ and guild’s cases were pending. Those cases are now being taken off the trial track, which is why Ellison can talk about a close in about two weeks and Zaslav can talk about early October.

THE DEAL CLOCK

1. February 27, 2026: Paramount and Warner Bros. Discovery sign the merger agreement.
2. July 13, 2026: Twelve states sue in San Francisco federal court to block the deal under Section 7 of the Clayton Act.
3. July 14, 2026: The Writers Guild of America files a parallel suit aimed at writer-services markets.
4. Late July 2026: The companies agree not to close until the cases are resolved or June 1, 2027, whichever comes first.
5. September 21, 2026: The states and the guild settle; Bonta announces the consent decree in Los Angeles.
6. October 1, 2026: A ticking fee of $7 million a day, owed by Paramount to Warner Bros. Discovery shareholders, is set to start if the deal is still open.

That fee is the reason the last weekend of talks existed. A March trial would have pushed closing toward the June 1, 2027 backstop and stacked daily payments on the way. The states used that calendar. They did not use it to force a sale of CNN, CBS News, or the core film libraries. They used it to write a five-year production order, a worker fund, a lot-preservation clause, a cable-bargaining wall, and a news board seated by the buyer.

If the judge signs, Ellison gets the studio, the cable networks, HBO, and the two newsrooms under one holding company, and Hollywood gets a quota to argue about through 2031. If a year comes in light, the check is $30 million a miss and, after the cure window, Miramax goes on the block. That is the trade the states made on September 21, and it is the trade the next five theatrical calendars will have to live with.