Paramount has reached a settlement with a coalition of state attorneys general, clearing the path for its $81 billion acquisition of Warner Bros. Discovery, according to people familiar with the matter.
The agreement, whose final terms were not immediately available, will allow Paramount to keep its cable channels rather than sell them. Settling the suit removes the most serious remaining obstacle to a deal that would combine two of Hollywood’s oldest studios, the Paramount+ and HBO Max streaming services, and dozens of television networks under one owner.
David Ellison won a bidding war against Netflix in February to buy Warner Bros. The combined company would control franchises including Harry Potter, DC superheroes, “Game of Thrones,” “The Godfather,” “Top Gun,” “South Park” and “Yellowstone,” along with cable networks such as CNN and Cartoon Network.
California Gov. Gavin Newsom, Los Angeles Mayor Karen Bass, gubernatorial candidate Xavier Becerra, major theater chains and some Hollywood unions pressed the parties to resolve the fight.
Negotiations over the weekend included possible concessions such as production investment, channel sales and a board to protect CNN’s editorial independence.
A settlement before trial would help Paramount avoid “ticking fees” that begin Oct. 1 if the deal has not closed: about $650 million a quarter, or $7 million a day, payable to Warner shareholders. The company had also warned it could leave California as soon as that date, with Tennessee seen as a likely destination. Bonta called that threat an attempt to blackmail regulators.
The merger has already won approval from the U.K. government, the European Commission, the U.S. Justice Department and other foreign regulators. On Thursday the FCC cleared a significant indirect ownership stake for three Gulf funds. The combined company is still expected to carry nearly $80 billion in debt.