States settle lawsuit over Paramount-Warner merger, clearing key hurdle
for $81 billion deal
[September 22, 2026] By
WYATTE GRANTHAM-PHILIPS and MICHAEL R. SISAK
CHICAGO (AP) — Twelve states and Hollywood writers challenging
Paramount’s buyout of Warner Bros. Discovery agreed to settle their
lawsuits on Monday, effectively paving the way for the $81 billion mega
merger to cross the finish line, with some new commitments from the
company.
The blockbuster deal will still vastly reshape Hollywood — bringing
together two of the “big five” remaining studios, key TV networks like
CBS and CNN and streaming platforms HBO Max and Paramount+, as well as
decades-old libraries with titles ranging from “Harry Potter” to “Top
Gun.”
But among terms of Monday’s agreement announced by California Attorney
General Rob Bonta — who led the states' case — Skydance-owned Paramount
pledged to increase film production in the U.S., commit millions of
dollars to a fund to support workers displaced by the merger and create
new monitoring of the editorial independence of the company’s news
operations.
The settlement still needs a final sign-off by a judge.
Paramount CEO David Ellison welcomed the terms reached with both the
states and the Writers Guild of America on Monday, which he said marks
“complete clearance” for his company's merger with Warner — reiterating
that such a combo will “build a stronger Hollywood.”
Critics, however, decried the settlement terms as too weak and accused
the state attorneys general of capitulating to corporate pressure. Many
saw the litigation as the last guardrail from keeping a combined
Paramount-Warner from becoming a reality.
Talks were contentious for months — and, despite new remedies announced
Monday, Bonta and other top state prosecutors who sued said that they
still didn't think the companies should merge.
Politics have also surrounded much of Paramount’s quest for Warner. Many
eyes are on the billionaire Ellison family's relationship with President
Donald Trump and the future of assets like CNN, which the Republican
administration barred from the White House over what Trump called
unfavorable coverage.
The states' settlement terms, explained
The coalition of states — which, beyond California, also includes
entertainment heavyweight New York — sued to block the merger in July,
alleging it would “extinguish competition” and lead to fewer choices for
consumers, particularly movie theatergoers and cable customers.
In Monday's agreement, the states said they had secured a handful of
“court enforceable” commitments from Paramount — including pledges to
increase domestic film production over the next five years by spending
at least an additional $1.5 billion, or $300 million per year, and
commit another $47.5 million to help fund training and career
development for workers displaced by the merger.
Paramount also must make good on its promise to release 30 films each
year for the next two years — and 32 films in each of the three years
after that. If it fails to do so, the states say it will be required to
divest from Miramax Studios and pay $30 million for each missed film
toward health care and retirement trust funds associated with the
Writers Guild of America and other industry unions.
When it comes to cable, Monday's settlement orders the company to
negotiate deals for current Paramount-owned and Warner-owned basic
channels separately for the next five years, which the states say will
help keep consumer prices down. The company must also form a “News
Editorial Independence Board” monitoring news operations at CBS and CNN.
Bonta said in a news conference in Los Angeles the settlement was about
“protecting people’s careers, the lives they’ve built here in
California, the livelihoods their families rely on," while maintaining
it was not a vote for the merger.
WGA also settles its challenge while warning of ‘damage to writers’
The Writers Guild of America, which filed its own lawsuit in July
challenging the merger on the grounds it specifically harms Hollywood
writers, separately confirmed that it settled its case, too — concluding
that it couldn't continue its legal fight alone.
“We continue to believe the merger will cause damage to writers and the
industry at large," the WGA said in a statement. The union maintained
that as a nonprofit “with no backing from government enforcers,” the
complex litigation would have cost millions of dollars.
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David Ellison, CEO of Paramount Skydance, speaks during the
Paramount Pictures presentation at CinemaCon on April 16, 2026, at
Caesars Palace in Las Vegas. (AP Photo/Chris Pizzello, File)
 New York Attorney General Letitia
James, who helped secure Paramount’s commitment to put $17.5 million
in the Writers Guild health care fund, said she will monitor the
company’s activities “to ensure they are following this agreement
and the law.”
Paramount previously agreed to delay its transaction well into next
year so the challenges could make their way through court. But it
soon called for a settlement — notably as it looked increasingly
likely that the price tag for Warner could get a lot more expensive.
Paramount had promised to pay shareholders “ticking” fee
compensation amounting to $7 million each day the deal was not
closed past Sept. 30.
Including billions of dollars in debt, Paramount’s buyout of Warner
is currently valued at about $111 billion based on outstanding
shares.
Others respond to deal
Over the weekend, a handful of lawmakers including Democratic Sens.
Elizabeth Warren and Cory Booker urged the states to keep up their
fight. Other critics decried the deal Monday while warning what
further consolidation could mean in an industry controlled by just a
few major players.
“Today, billionaires have yet again bribed, censored, and bullied
their way to the top,” Alvaro Bedoya, senior adviser at the American
Economic Liberties Project and a former commissioner of the Federal
Trade Commission, said in a statement. “Layoffs will follow. People
from L.A. to Atlanta will lose their jobs, small businesses will
lose their contracts, your cable bill and movie ticket will be even
more expensive.”
Bedoya claimed Bonta and California Gov. Gavin Newsom caved to
pressure — particularly after Paramount reportedly threatened to
leave the state amid the antitrust battle.
But in a statement Monday, Ellison said that the newly combined
company would be based in Los Angeles.
“We aren’t going anywhere. Our history is here and this is where our
future is being built," he said.
Paramount never publicly commented on a potential move from
California, and Monday's settlement doesn't specify that its
headquarters stay in the state. But over the summer, Tennessee
officials wrote Ellison a letter encouraging Paramount to relocate
there.
Newsom said the deal was a win for workers and California’s creative
economy.
“It protects California jobs while putting a safeguard in place to
help preserve editorial independence for two of America’s most
important news organizations,” Newsom said in a statement.
Connecticut Attorney General William Tong, whose state was among
those filing suit, said his main goal had been to protect the
editorial independence of CNN and CBS News and that he wanted to see
a full divestiture of the two news organizations.
A week ago, Tong said, Paramount refused to agree to any editorial
independence for the news outlets.
“We wanted to save ethical and independent journalism and news,” he
said in a statement.
Tong and others stressed that it was an uphill battle after the
Trump administration decided against intervening. In June, the U.S.
Justice Department released a lengthy statement supporting the
merger.
“The complete abdication of the federal government’s enforcement
role in this fight left states with one arm tied behind our backs,"
Tong said.
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AP Writers Sophie Austin in Sacramento and Dave Collins in Hartford
contributed. Sisak reported from New York
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