Paramount is ready to acquire Warner Bros. Discovery for $110 billion.

Paramount Skydance has overcome the final major legal hurdle for its massive merger with Warner Bros. Discovery by settling lawsuits filed against the acquisition deal by 12 US states and the Writers Guild of America (WGA).

As reported by Reuters, the Wall Street Journal, and Bloomberg news services on September 21, Paramount has agreed to settle the lawsuits with 12 states, including California, and the Writers Guild.

Following court approval of the settlement proposal submitted by both parties, the injunction suspending this merger will be lifted. Paramount is expected to pay approximately US$81 billion (110.3058 trillion Korean Won) for the acquisition of Warner, with the total value of the deal, including Warner's debt, being approximately US$110 billion. Through this merger, control of several leading broadcast and streaming networks, including Paramount+, HBO Max, CNN, CBS, HBO, and Cartoon Network, is expected to come under one entity. Previously, in July, 12 states filed lawsuits arguing that the merger of these two media giants could lead to a reduction in the number of films screened in theaters and an increase in cinema and broadcasting fees. In addition, the Writers Guild of America also filed a separate lawsuit, stating that this merger could lead to a deterioration of job opportunities, writers' wages, and working conditions.

According to the agreed settlement terms, Paramount must screen a minimum of 30 films annually in theaters during the first two years after the merger, and release 32 films annually in the subsequent three years. Of these, at least four films must be independent films, and more than 20% of the total films released must be blockbusters. A fine of $30 million will be imposed for each film that fails to meet these theatrical release quotas, and if major settlement terms are violated, Paramount may be required to sell its ownership of Miramax or certain cable channels. Furthermore, from 2025, domestic film production costs are set to increase by $300 million annually, with that investment totaling at least $1.5 billion over five years. 

Paramount and Warner have also agreed to maintain their Los Angeles studio complexes and invest $9.5 million annually (12.9 billion Korean Won) in employee training and professional development. For a period of five years after the merger, usage fees and supply agreements for the relevant cable channels must be renegotiated separately, and fees charged by theaters will remain unchanged for three years. Furthermore, a separate committee is to be established to monitor the editorial independence of CNN and CBS News.

This step was taken due to concerns raised about potential political influence from Larry Ellison, founder of Oracle and father of Paramount CEO David Ellison, who is considered an ally of US President Donald Trump. The Writers Guild agreed to withdraw the lawsuit on the conditions that CBS News broadcast writers would not be laid off for five years and that a contribution of $17.5 million would be made to the writers' health fund. However, the Guild continues to maintain its stance that this merger will negatively impact writers and the industry. The Writers Guild explained that it was difficult to continue a lengthy legal battle, costing millions, on its own without government support after the states reached a settlement. 


California Attorney General Rob Bonta emphasized that "this settlement does not approve or bless the merger." The Wall Street Journal points out that Paramount managed to avoid large-scale asset sales or reorganizations. However, as the merged company takes on $80 billion in debt and expects $6 billion in cost cutting, concerns persist regarding the risk of job cuts at Hollywood production facilities, CNN, and CBS News. According to Reuters, this settlement is a significant victory for Paramount and its CEO, David Ellison.

It was stated that it was difficult for the states to prevent the deal as federal authorities had already approved it, and past merger oversight mechanisms had not been effective in maintaining film release quotas and editorial independence. According to The New York Times, Paramount plans to finalize the acquisition within two weeks of receiving court approval. The US Department of Justice, the European Union, and UK competition authorities have already given their approval. If Paramount fails to complete the deal before September 30, Warner shareholders will have to pay a penalty of $7 million per day.