Judge allows Paramount to close $110 billion takeover of Warner Bros. Discovery

A federal judge on Wednesday signed off on Paramount Skydance's settlement with California and other state attorneys general, clearing the last legal obstacle to its purchase of Warner Bros. Discovery. NBC News valued the deal at $110 billion, while Variety and The Hollywood Reporter put the price at $111 billion. Paramount and Warner Bros. Discovery said in a statement that the transaction is expected to close Oct. 6.

The merger, pushed through by Paramount chief David Ellison, joins CBS, CNN, MTV, Comedy Central and other cable networks with the HBO Max and Paramount+ streaming services, plus the Warner Bros. and Paramount Pictures film studios, according to Variety and NBC News. Variety described it as the costliest takeover in Hollywood history, combining franchises such as Harry Potter, Game of Thrones, the DC Universe, Yellowstone, Mission: Impossible and Top Gun. U.S. District Judge Araceli Martínez-Olguín's ruling came hours before a penalty clause was due to take effect: Paramount had agreed to pay Warner Bros. Discovery shareholders 25 cents per share every quarter if the deal failed to close by Sept. 30, a charge NBC News said would run more than $600 million every three months.

Settlement terms

Under the consent decree, Paramount-Warner Bros. must release at least 30 theatrical films a year for its first two years and 32 a year for the following three, keep minimum numbers of wide and independent releases, and ensure at least half of its films are produced or co-produced by the combined company, The Hollywood Reporter reported. The deal sets 45-day theatrical windows and a 90-day holdback before films reach streaming, with a $30 million penalty per film for missing the annual quota and possible divestiture of Paramount's stake in Miramax if shortfalls continue. Variety reported the company must also invest at least an additional $300 million annually in U.S. film production, while NBC News said the merged company pledged more than $1 billion for U.S. film production and worker training. A five-member independent board, selected by Paramount, will oversee editorial standards at CBS News and CNN, and the companies must keep basic-cable negotiations separate or risk being forced to divest BET, VH1 and Comedy Central, according to The Hollywood Reporter.

Larry Ellison, the father of David Ellison, has personally guaranteed $46.7 billion in equity financing for the takeover, Variety reported. Paramount has also secured roughly $24 billion in commitments from the sovereign wealth funds of Saudi Arabia, Qatar and the United Arab Emirates, which Paramount said will together own 38.5% of the combined company. Martínez-Olguín wrote that the settlement "represents a reasonable factual and legal resolution of the dispute" reached after "highly contested, however brief, litigation."

The lawsuit had been led by California Attorney General Rob Bonta, who along with other state attorneys general worried the merger would reduce competition and threaten the journalistic independence of CNN, NBC News reported. The deal had already been cleared by the U.S. Justice Department and the European Commission; Variety reported regulators in 68 jurisdictions worldwide had approved it, while NBC News said it had won approval in dozens of countries. Paramount Skydance reached its settlement with the states on Sept. 21, according to NBC News. A spokesperson for the California Department of Justice said the office was "pleased the court has approved our settlement" and that it "resolves our antitrust concerns in every market we brought in our case."

Opposition continued even after the ruling. Sen. Cory Booker said in a statement that the settlement does not resolve the concerns that prompted the antitrust suit, adding, "I will watch this merger, and others, closely to make sure it does not threaten competition, raise prices, or invite corruption." The Block the Merger coalition filed an amicus brief urging the judge to reject the settlement, arguing, "As for the so-called remedies the settlement offers, they do nothing to protect fair competition." The League of United Latin American Citizens separately objected, saying in a filing that the combined company would likely invest less in productions about Black and Latino communities than two independently competing studios would, according to Variety.

What happens next

Shortly after the ruling, Ellison announced that outgoing Mattel chief executive Ynon Kreiz will join as co-CEO, overseeing day-to-day operations and integration starting Oct. 5. "Bringing together Paramount and Warner Bros. Discovery to create a next-generation global media company is a transformational moment for our industry," Ellison said in a statement. Warner Bros. Discovery chief David Zaslav is expected to depart and stands to receive more than $550 million in stock and cash, including $34.2 million in cash severance, Variety reported, with chief revenue and strategy officer Bruce Campbell and CFO Gunnar Wiedenfels also expected to exit. Paramount streaming chief Cindy Holland announced her departure Tuesday, and HBO's Casey Bloys is set to take over the combined streaming business, according to Variety and The Hollywood Reporter. Shares of both Paramount Skydance and Warner Bros. Discovery closed near their highest levels of the day on the news, NBC News reported, after Paramount shares had fallen more than 20% since the start of the year while the merger remained in limbo.