Paramount has reached a settlement with California and 11 other US states that had sued to block its proposed acquisition of Warner Bros. Discovery.

The agreement, announced Monday, September 21, resolves an antitrust lawsuit challenging Paramount’s planned takeover of Warner Bros. Discovery. The deal, valued at about US$110 billion according to reporting, would bring major entertainment brands and businesses under one company, including Paramount Pictures, Warner Bros. Pictures, CBS, CNN and major streaming services.

Under the settlement, Paramount has agreed to a series of legally enforceable commitments designed to address concerns about film production, competition and employment in Hollywood. The merged company must release at least 30 theatrical films annually during its first two years, followed by 32 films a year for the next three years.

At least four films each year must come from independent producers and at least 20% of the annual releases must qualify as high-budget “tentpole” films. Paramount must also increase US production spending by at least US$300 million annually compared with 2025 levels.

The agreement includes penalties if the company fails to meet its film-production obligations. Paramount could be required to pay US$30 million for each missed film and potentially divest Miramax Studios.

The settlement also requires the combined company to maintain a free streaming service similar to Pluto TV and prevents it from selling Paramount’s and Warner Bros.’ California studio lots for at least five years.

It also addressed concerns around news media with the agreement calling for an independent board of five experienced journalists to oversee editorial independence at CBS and CNN. The Writers Guild of America has separately settled its antitrust lawsuit against Paramount over the proposed merger. 

California Attorney General Rob Bonta said the settlement should not be interpreted as an endorsement of the merger. He said the agreement was intended to address the states’ concerns about competition, consumer choice and the impact on workers

Paramount CEO David Ellison welcomed the agreement, saying the company now has “complete clearance” for the merger and arguing that the combined businesses could create more opportunities for the entertainment industry.

Though the settlement still requires court approval, if approved, the agreement would clear the way for one of Hollywood’s largest media mergers in years, combining two major studio operations.