Paramount Skydance and Warner Bros. Discovery have reached an agreement with California and 11 other US states that removes a major obstacle to their proposed $110 billion merger.
The settlement, filed in the US District Court for the Northern District of California, lays out a series of binding conditions covering movie production, theatrical distribution, cable programming, labor, studio facilities and news operations.
The deal would bring together major entertainment and media assets, including CBS and CNN, creating one of the largest companies in the US media industry.
Higher movie production commitments
Under the proposed settlement, the combined company would have to release at least 30 theatrical films annually during the first two years covered by the agreement. That requirement would rise to 32 films a year for the following three years.
At least four releases each year must come from independent films, while a minimum of 20% of the annual slate must consist of blockbuster or “tentpole” productions.
The company would also be required to spend at least $300 million more each year on domestic film production than it did in 2025. Over five years, that amounts to a minimum additional investment of $1.5 billion.
Missing the annual film quota would carry a $30 million payment for every film below the required number. The money would be divided among Hollywood labor health and retirement funds, California’s Film and Television Fund and a national fund supporting antitrust enforcement by state attorneys general.
Paramount would also create an annual fund dedicated to acquiring films made by independent filmmakers.
The agreement places additional restrictions on terms offered to movie theater operators. Certain exhibitor fees would have to remain unchanged for three years, while pricing and distribution arrangements would be subject to enforceable protections.
Production obligations could become even larger if new film tax incentives are enacted. A federal tax credit of at least 20% would trigger higher US production requirements, while an uncapped incentive adopted by California or New York could raise the requirement further.
Cable channels kept at arm’s length
The settlement also seeks to prevent the merged company from using its expanded size to alter the competitive landscape for basic cable programming.
For five years following the merger, Paramount and Warner Bros. Discovery’s legacy cable businesses would have to negotiate distribution and carriage agreements separately.
The companies would also face restrictions on sharing confidential licensing and affiliate information between the two sides during negotiations.
Additional limits would apply to affiliate-fee negotiations with pay-TV and satellite operators, with the settlement aiming to place guardrails around changes that could affect consumer prices.
Studios and workers receive protections
Both companies’ existing physical studio lots would have to be maintained after the merger.
The combined company would also be required to honor existing collective bargaining agreements and negotiate with entertainment industry unions in good faith.
Another provision calls for $9.5 million in annual spending on workforce development, career training, educational film initiatives and community arts programs.
New structure for CBS and CNN news operations
News coverage is another major part of the settlement.
An independent News Editorial Independence Board would be established to oversee standards intended to preserve editorial autonomy and fact-based reporting at both CBS News and CNN.
Oversight comes with significant penalties
The settlement creates several layers of monitoring. An independent Monitoring Trustee, an internal Compliance Monitor and a five-state oversight committee would track whether the merged company follows the agreement.
Violations of key provisions could lead to substantial financial penalties and, in serious cases, court-ordered divestitures of assets.
The settlement also lifts a July 24, 2026 “No-Close Order,” clearing the way for Paramount and Warner Bros. Discovery to complete their transaction.
The agreement does not require either company to admit liability or wrongdoing under Section 7 of the Clayton Act.
