California settles antitrust case, allowing Paramount-Warner Bros. merger under consent decree

California reached a settlement that clears the way for Paramount Global’s $111 billion purchase of Warner Bros. Discovery, ending a state-led antitrust lawsuit. The agreement, approved through a consent decree, requires the combined company to release at least 30 theatrical films annually for the first two years and 32 for the next three, maintain specific wide and independent release numbers, and ensure half of the films are produced or co-produced by the merged entity. The parties must keep a 45-day theatrical window and a 90-day streaming holdback for qualifying titles, with a $30 million penalty per film for missing quotas and a possible divestiture of Paramount’s Miramax stake if shortfalls persist.

Under the decree, Paramount and Warner Bros. must spend an additional $300 million each year on U.S. production, totaling $1.5 billion above the 2025 baseline over five years, and keep their Los Angeles studio lots operational for the duration of the agreement. The settlement also separates basic-cable negotiations for the two companies and establishes a five-member independent board to oversee editorial standards at CBS News and CNN, with potential divestiture of certain cable assets if violations occur.

Governor Gavin Newsom, who had expressed concerns about the lawsuit’s impact on employment and the state’s reputation, intervened in the negotiations. > “I’m very mindful of what this means to the state — our reputation,” Newsom said at a press event. Paramount thanked the governor for his support during the settlement announcement.

Attorney General Rob Bonta, who had previously argued that the merger would harm Hollywood, acknowledged the settlement’s limitations. > “I don’t think these two companies should merge,” he said at a press conference.

The deal avoids the $7 million-per-day penalty that would have begun on Oct. 1 if the merger proceeded without an agreement. State officials noted that the risk of Paramount relocating its headquarters and thousands of jobs out of California had become a decisive factor. While several other states, including New York and Connecticut, expressed reservations—Connecticut’s AG William Tong criticized the lack of full divestiture of CNN and CBS News—the California settlement helped unify the coalition of states pursuing the case.

Legal experts highlighted the difficulty of winning merger challenges in court, noting that the government had already approved the acquisition and that antitrust trials carry uncertain outcomes. The settlement therefore represents a compromise that imposes operational safeguards without requiring the breakup of the combined company.