Paramount Skydance’s planned acquisition of Warner Bros. Discovery cleared one of its largest remaining legal hurdles on Monday after California and 11 other states agreed to settle an antitrust lawsuit that had sought to block the roughly $110 billion transaction. The announcement sent Warner Bros. Discovery shares up about 11%, with WBD trading near $30.80 during the U.S. session, just $0.20 below Paramount’s $31-per-share cash offer.
California Attorney General Rob Bonta confirmed the settlement following weekend negotiations. The coalition that sued in July included New York, Connecticut, Massachusetts and Minnesota. Under the terms, Paramount will increase domestic film-production spending by at least $300 million annually for five years, equivalent to at least $1.5 billion in additional spending. The company also committed to release 30 theatrical films in each of the first two years after closing and 32 in each of the following three years. Missing a film target carries a $30 million penalty per film, with most of the money directed toward worker-support funds.
The settlement includes an editorial-independence board to oversee protections for CNN and CBS News, and Paramount agreed not to increase rates charged to theater operators for three years. Bonta called the agreement a “strong antitrust outcome” while stressing that settling the case did not amount to endorsing the merger.
Prediction market traders had already been raising the probability of completion. On Polymarket, odds that the merger closes before year-end jumped to 83% from last month’s low of 8.3%, with Kalshi also showing higher deal odds. The timing is financially important: under the merger agreement, Warner Bros. Discovery shareholders begin receiving a ticking fee equivalent to $0.25 per share per quarter, calculated daily, if the transaction remains unfinished after September 30. Reuters estimated that obligation at about $7 million per day, while the deal also carries a $7 billion regulatory termination fee.
Paramount said in August it had secured required approvals across 68 countries, including the U.S. Justice Department, European Union, UK, China, Canada and Australia. The Writers Guild of America also settled its parallel lawsuit, according to Reuters, although the union maintained the transaction will hurt writers and the wider industry. The deal still requires judicial approval and completion of remaining closing procedures.
Financial results have raised questions about whether Paramount is overpaying. Paramount Skydance reported second-quarter revenue up 1% to $6.8 billion, operating income of $399 million and net profit of $58 million. Warner Bros. Discovery’s revenue fell 11% to $8.7 billion, with advertising down 22% and content down 26%. The combined company would be one of the most levered U.S. firms, with nearly $80 billion in debt. PSKY stock ended last week at $10.21, below September’s high of $11.13, and technical analysts note an inverted head-and-shoulders pattern that could point to more upside if resistance at $11.13 breaks.
