Paramount Settles Antitrust Case With State AGs, Removing Obstacle to Warner Bros. Deal

Paramount has reached a deal with 12 state attorneys general that removes a major obstacle to closing its acquisition of Warner Bros. Discovery.

The deal comes just before the company was to begin accruing a $7 million daily “ticking fee” on Oct. 1, which was seen as an important milestone in the case. Bloomberg was first to report the news, followed by the Wall Street Journal. A source also confirmed to Variety that a deal is done.

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The merger was on hold pending the outcome of the states’ antitrust lawsuit, which was set for a trial on March 2, 2027. The $111 billion merger is the largest in Hollywood history.

Details of the agreement have yet to be made public. An official announcement is expected to come later Monday. The two sides spent the weekend in tense discussions over Paramount’s commitments to remain in California and over guarantees for its production levels. The discussions also focused on editorial oversight of CBS News and CNN, a key concern for East Coast attorneys general. Sources said the settlement does not require Paramount to make any major divestitures.

California Attorney General Rob Bonta led the 12-state coalition, which sued to block the deal in July despite prior approval from the U.S. Department of Justice. Since then, Bonta has insisted on “robust structural remedies” — which has been taken to mean significant divestitures.

Opponents of the deal were quick to blast Bonta for “caving” to Paramount’s pressure campaign.

“Today, billionaires have yet again bribed, censored and bullied their way to the top,” said Alvaro Bedoya, a senior advisor at the American Economic Liberties Project, who also expressed disappointment with California Gov. Gavin Newsom and Xavier Becerra, who is running for the governor’s seat. “People want champions who are not afraid of rich bullies. Newsom, Becerra and Bonta did not meet that mark. The people who work in the film and TV industry and the small businesses who support it will suffer as a result. And so will everyone who values dissent in our democracy.”

The Writers Guild of America filed a separate suit to block the merger in July, and that case was set to be heard along with the states’ case in March. The WGA is expected to sign on to the settlement agreement.

Judge Araceli Martinez-Olguin, who is overseeing the states’ antitrust case, granted a 28-day restraining order in July, finding that the states had put forward a strong case that the deal would harm competition in the basic cable and theatrical markets.

Paramount then agreed to pause the transaction until a trial on the merits, rather than fight a motion for a preliminary injunction. The states argued that the merger would lead to higher prices and fewer options for theaters and cable and satellite providers, who would in turn pass on higher costs to consumers.

Paramount has argued all along that the deal is pro-competitive and will result in more content production as the company seeks to take on streaming giants like Netflix and Amazon.

In recent weeks, Paramount has sought to ratchet up the pressure on Bonta to abandon the case, including by threatening to leave California and move to Texas or Tennessee. Paramount has also enlisted state Democratic lawmakers to urge Bonta to settle, while IATSE and the Directors Guild of America have also pushed for a deal.

Cinema United, the trade group representing theaters, had initially strongly opposed the merger. But as its three largest members — AMC, Cinemark and Regal — came out in favor of a settlement one-by-one, the group also reversed itself and called for a deal. That left Bonta and the other attorneys general in the position of trying to prove economic harm to exhibitors without the support of many of them.

Matt Donnelly contributed to this article.