Paramount Skydance and a coalition of 12 Democratic state attorneys general spent the weekend hashing out the terms of a potential settlement that could clear the last major legal obstacle to the studio's $81 billion acquisition of Warner Bros. Discovery.
The settlement negotiations come as Paramount faces a mounting financial penalty of approximately $7 million per day – totaling roughly $650 million per quarter – that began accruing in October under the company's merger agreement with Warner Bros. Discovery shareholders, according to the Wall Street Journal.
With a federal trial not scheduled until March 2027, the ticking fees give Paramount a powerful incentive to get a deal done before then. If the merger remains unclosed until the June 2027 deadline agreed to by the parties in court, Paramount could owe Warner shareholders approximately $1.7 billion, according to Reuters.
A $1.5 billion commitment to invest in film and television production in California is among the terms being discussed, along with a promise to keep both the Paramount and Warner Bros. studio lots in Los Angeles and to maintain the company's California headquarters.
Paramount had previously floated the possibility of relocating out of the state if the antitrust case proceeded to trial – a threat the Hollywood Reporter described as CEO David Ellison privately saying he may have had to begin relocation logistics as early as October 2026.
On the film side, the two parties have discussed enforceable mechanisms tied to Ellison's standing promise to release at least 30 theatrical films per year from the combined studios. Bloomberg reported that the sides have explored a penalty of $30 million per film if that commitment goes unmet. One scenario under discussion would require Paramount to sell its stake in Miramax as a consequence of missing the threshold, the Wall Street Journal reported.
The sides have also discussed the potential sale of some cable channels as a structural remedy to address the antitrust complaint's cable television component. The Hollywood Reporter cited Comedy Central as one channel that has been floated as a possible divestiture, given its wide reach in the pay-TV ecosystem.
Separately, the creation of an editorial oversight board for CNN has been explored as a way to preserve the news network's independence under the combined company. CNN has been a particular sticking point for New York Attorney General Letitia James and Connecticut Attorney General William Tong, according to the Hollywood Reporter. Ari Emanuel is among the media executives who have reportedly floated the oversight board concept.
California Attorney General Rob Bonta is leading the 12-state coalition that filed the antitrust lawsuit in July 2026, arguing that combining Paramount and Warner Bros. Discovery would concentrate too much power in both the theatrical film distribution and basic cable television markets. A parallel suit from the Writers Guild of America contends the deal would cost Hollywood screenwriters jobs and career opportunities.
Even if Bonta and Paramount reach a preliminary agreement, any state that does not accept the terms, or continued opposition from the WGA, could complicate or derail a final settlement.
About two dozen demonstrators gathered outside state offices in downtown Oakland on Sept. 21, 2026, to protest a potential settlement. "Nothing has changed since he filed the case," Annie Leonard, co-founder of the nonprofit Committee for the First Amendment, said at the rally, according to the Wall Street Journal.
The merger has cleared regulatory review in nearly 70 jurisdictions, according to the Financial Times, including Mexico and the United Kingdom. The Federal Communications Commission approved a 49.5 percent foreign ownership stake in the deal – from Middle Eastern sovereign wealth funds – in the week of Sept. 15, 2026, the Financial Times reported. The California antitrust suit and the WGA action are the remaining obstacles.
Paramount had separately asked a federal judge to require the plaintiff states and the WGA to post a nearly $1.9 billion bond as a condition of continuing to challenge the deal, the Wall Street Journal reported.
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