Paramount Settles State Antitrust Suit, Clears Path for $110.9B Warner Bros. Discovery Deal

Paramount Skydance's seven-month campaign to close a $110.9 billion takeover of Warner Bros. Discovery cleared its last domestic legal hurdle on September 21, when the company reached an out-of-court settlement with a dozen state attorneys general who had been trying to block the deal on antitrust grounds.

The settlement, filed with a federal court in the Northern District of California, arrived with a price. Under terms reported by Deadline and confirmed in a proposed consent decree reviewed by the New York attorney general's office, the combined entity must commit for five years to a minimum number of annual film releases and must spend $300 million more on domestic U.S. film production than it did in 2025. The decree also sets spending floors tied to any federal film tax credit Congress might establish. Breach any of those film-output terms and the company could be forced to divest its interest in Miramax. Cable terms carry their own trigger: violations could require Paramount to shed channels including BET, Comedy Central, VH-1 and Science.

A separate provision sets up an editorial independence board to oversee CBS News and CNN post-merger, a condition that tracks requirements the U.K. government had already imposed on the deal separately.

The lawsuit, led by California Attorney General Rob Bonta, had alleged antitrust violations across three markets: cable programming, wide-release films, and blockbuster films. A temporary restraining order early in the case stopped the parties from closing while litigation ran. Without the settlement, according to reporting by Deadline, trial was set for March, which would have left the deal in limbo through mid-2027.

The financial architecture of the transaction is straightforward in size and complex in structure. Under the merger agreement signed February 27, Paramount agreed to pay $31 per WBD share, representing an equity value of $80.9 billion at signing, according to Paramount Skydance's Form 10-Q filed with the SEC. The company also assumed WBD's net debt, which at March 31 stood at $17.7 billion in senior notes plus $15.0 billion in bridge facility borrowings. That puts the combined debt load somewhere in the range industry participants have cited publicly at roughly $80 billion, a number that dominated the deal's reception from the moment it was announced.

To fund the equity side, David Ellison's family and RedBird Capital are supplying $43.6 billion, according to CNBC's reporting on the deal's financing structure. Paramount also paid a $2.8 billion termination fee to Netflix on WBD's behalf, covering a prior merger agreement Netflix had struck with WBD before Ellison sweetened his offer enough to win the board over. That fee was initially drawn from a credit facility and will ultimately be reimbursed from Ellison-side equity, per the SEC filing.

Regulatory clearances had been stacking up before the state lawsuit intervened. The DOJ signed off in June. The European Commission approved the deal, but required Paramount to exit its United International Pictures distribution venture with Universal Pictures. Australia, Canada, South Africa, China, and the U.K. all cleared the transaction in the same period, with the U.K. adding its own editorial-independence and linear/on-demand separation requirements.

A ticking-fee provision in the merger agreement now becomes relevant. Starting September 30, Paramount owes WBD stockholders $0.00277778 per share per day the deal stays open, capped at $0.25 per share per 90-day period, according to the SEC filing. That's a running cost of roughly $222,000 a day on the equity alone, a modest number relative to deal size but a clock neither party has an incentive to let run long.

Ellison, in a statement carried by CNBC, said Paramount was grateful to the attorneys general for "engaging in good faith." Investor reaction to whether the consent decree's film-spending mandates are manageable, or a ceiling on the cost cuts the deal's debt load demands, will be the first test of market sentiment once shares trade freely on the combined entity.

WGA's parallel suit ran alongside the state case. Its resolution was folded into the same settlement process, removing what had been the other organized opposition to the deal closing.

Sources cited:
- Deadline Hollywood (https://deadline.com/2026/09/paramount-settles-antitrust-suit-to-seal-warner-bros-deal-1237109223/)
- Deadline Hollywood, Consent Decree (https://deadline.com/2026/09/paramount-warner-bros-discovery-consent-decree-1237109397/)
- CNBC (https://www.cnbc.com/2026/09/21/paramount-reaches-settlement-over-warner-bros-merger.html)
- Paramount Skydance Corp, Form 10-Q (SEC, Q2 2026) (https://www.sec.gov/Archives/edgar/data/0002041610/000204161026000054/psky-20260630.htm)
- California et al. v. Paramount Skydance, Consent Decree (NYAG) (https://ag.ny.gov/sites/default/files/settlements-agreements/california-et-al-v-paramount-skydance-corp-warner-bros-discovery-inc-consent-decree-2026.pdf)
- Wikipedia, Proposed acquisition of Warner Bros. Discovery by Paramount Skydance (https://en.wikipedia.org/wiki/Proposed_acquisition_of_Warner_Bros._Discovery_by_Paramount_Skydance)