Paramount reaches deal with US states: path cleared for $110 billion merger with Warner Bros.

Paramount Skydance has reached a settlement with California and the other US states that had sued to block the proposed acquisition of Warner Bros. Discovery for around $110 billion, according to a source close to the talks cited by Bloomberg. The deal removes the biggest legal hurdle ahead of one of the largest mergers in Hollywood history.

The talks were finalized over the weekend, after the four states that had opposed the terms — Massachusetts, New York, Connecticut and Minnesota — withdrew. Lawyers worked through the night to finalize the details, while the official announcement is expected today.

The terms include a financial penalty if the company fails to deliver on its promise to distribute 30 films a year in cinemas: $30 million for every film below this quota. If it fails to meet the target, the company could be forced to sell its shares in the Miramax studio, known for “Pulp Fiction”, according to the Wall Street Journal.

The states that held out the longest secured the creation of independent editorial boards for CNN and CBS as part of the deal. Among other terms on the table: a $1.5 billion investment in production in California, keeping both studio lots and the headquarters in California, as well as the possible sale of some cable channels such as Comedy Central.

If the deal is finalized, Paramount escapes delay fines of $7 million a day that it would owe Warner Bros. starting October 1.

Background: About a dozen Democratic state attorneys general and the Writers Guild sued over the deal in July, fearing consolidation would reduce jobs and competition. Paramount CEO David Ellison argues the merger is needed to compete with tech giants. The promise of 30 films a year was initially made to win the support of cinema operators; California Attorney General Rob Bonta was skeptical because the promise was hard to enforce — the $30 million fine addresses exactly that.

Burimi: Bloomberg