Paramount Skydance Settles With California and 11 Other States in Boost to Warner Bros. Discovery Merger, Reports Say

Paramount Skydance has reached a settlement with California and 11 other states that sued to block its $110 billion acquisition of Warner Bros. Discovery, according to a source familiar with the matter and multiple reports Monday, removing one of the last major obstacles to closing a deal that would reshape Hollywood, Yahoo Finance reported.

Shares of both companies jumped on the news. Reuters, cited by Yahoo Finance, reported Paramount up more than 8% and Warner Bros. Discovery up more than 10% on Monday. A separate Yahoo Finance report published earlier in the day put the moves at 7% for Warner Bros. Discovery and 5% for Paramount Skydance. Interpretation: the two sets of figures are snapshots of the same session taken at different times rather than competing totals, and the article does not establish a single closing move.

What the settlement reportedly includes

Details of the agreement have not been made public, but sources cited by Reuters and Bloomberg described several concessions. The settlement reportedly creates independent editorial boards for CNN and CBS, addressing state concerns about newsroom independence, according to sources cited by Reuters in reporting carried by CNBC and Yahoo Finance.

The agreement also reportedly sets a $30 million penalty per film for any shortfall against Paramount's pledge to release at least 30 movies in theaters annually, per those same sources. Bloomberg, cited by Yahoo Finance, additionally reported that Paramount could be forced to sell its 49% stake in Miramax if it fails to meet that annual release target.

Those terms track concessions the Wall Street Journal reported Sunday were under discussion between Paramount and California's attorney general, including a $1.5 billion investment in production in the state, a commitment not to sell either studio's lot, and potential penalties for missing release targets. WSJ also reported that selling some cable channels was among the measures under consideration.

Spokespeople for Paramount, Warner Bros. Discovery and California Attorney General Rob Bonta's office did not immediately respond to Reuters' requests for comment, according to Yahoo Finance.

Notably, one Yahoo Finance report described the state of play differently, saying settlement talks between Paramount and Bonta had accelerated in recent days although no final agreement had been reached — an uncertainty that sits alongside Reuters' report of a completed settlement. Even with the states resolved, Yahoo Finance reported that a separate Writers Guild of America lawsuit remains outstanding, with the union arguing the merger would decrease pay and worsen working conditions for film and television writers. Morningstar analyst Matthew Dolgin, quoted by Yahoo Finance, said the unions face long odds: "The final hurdle will be some trade unions that also have a similar lawsuit outstanding, but they'll be hard pressed to hold up this deal without paying the bond that Paramount requested," referring to the $1.88 billion bond Paramount requested to address the costs of delay in closing the deal. Bottom line: according to Reuters reporting carried by Yahoo Finance, a settlement with the states would help Paramount avoid a roughly $7 million-a-day "ticking fee" owed to Warner Bros. Discovery shareholders for each day the deal does not close past Sept. 30; CNBC reported the fee equates to an additional 25 cents per share per quarter, an estimated $650 million per quarter in added cash value.