Key facts
- California and Paramount Skydance have reportedly reached a settlement allowing the $111 billion merger with Warner Bros. Discovery to proceed.
- The settlement, expected to be announced today, has drawn condemnation from Democrats and media advocates.
- Lina Khan, chair of the Federal Trade Commission, stated the merger appears illegal and that behavioral remedies routinely fail.
- The deal will allow Paramount to combine two of the largest movie studios and merge streaming services.
- The combined company is set to emerge with nearly $80 billion in debt.
- The settlement includes provisions for independent editorial boards for CBS and CNN, and a financial penalty for failing to distribute 30 films per year in theaters.
California and Paramount Skydance have reportedly reached a settlement that will allow the $111 billion merger between Paramount and Warner Bros. Discovery to proceed, a development that has drawn sharp criticism from media advocacy groups and Democratic lawmakers. The settlement, expected to be announced imminently, comes after a lawsuit filed by California and other states aimed at blocking the deal on antitrust grounds.
Federal Trade Commission Chair Lina Khan expressed concern, stating that the merger appears "facially illegal" and that "behavioral remedies routinely fail." She emphasized the high stakes involved, noting that a strong democracy requires open markets for journalism and creative expression.
According to reports, the settlement was finalized after four other states that had initially opposed the terms agreed to by California conceded. These states reportedly concluded that the cost of continuing the legal battle was not justifiable without California's leadership. As part of the agreement, Paramount has reportedly agreed to terms including the establishment of independent editorial boards for CBS and CNN, and a financial penalty if the company fails to distribute 30 films annually in theaters.
Media advocacy groups, including Free Press and Public Knowledge, have voiced strong disappointment. Free Press co-CEO Jessica J. González criticized California Attorney General Rob Bonta for allegedly going back on his promise to protect consumers and workers, calling the merger an "unlawful merger" driven by "corruption and extortion." John Bergmayer, legal director at Public Knowledge, argued that the settlement fails to address the core issue of reduced competition, which he believes will lead to higher prices for consumers and fewer opportunities for creative workers.
Democratic lawmakers, such as US Representatives Ro Khanna and Jamie Raskin, had been urging state attorneys general to resist the merger, citing concerns about economic concentration and the "MAGA political capture of America’s media institutions." They had hoped the California lawsuit would serve as a bulwark against the deal.
The lawsuit, filed in July by twelve states led by California, had successfully delayed the merger by convincing a federal judge that the combination would likely reduce competition and violate antitrust laws. The deal would consolidate two major movie studios, merge streaming services Paramount+ and HBO Max, and place CNN and other TV channels under single ownership. The combined entity is expected to carry nearly $80 billion in debt.