Judge Approves Paramount Settlement With Democrat AGs, Clearing Path for $111 Billion Warner Bros. Merger

Since California Attorney General Rob Bonta and 11 other Democratic state AGs sued in July to block the Paramount-Warner Bros. Discovery merger, the case has moved fast. U.S. District Judge Araceli Martínez-Olguín approved the states' settlement with Paramount on Wednesday, clearing the final legal obstacle to what will be the most expensive media takeover in Hollywood history.

Paramount and Warner Bros. Discovery announced Wednesday night, in a joint filing, that they expect to close the $111 billion merger on October 6. Under the merger agreement, WBD shareholders will receive $31.00 per share plus a small daily accrual, totaling roughly $31.02 per share if the deal closes on schedule, according to a Paramount investor relations filing.

What the Settlement Requires

The states, led by Bonta and including Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington, had argued the merger would gut competition, estimating nearly one-third of theatrical releases and basic cable programming would fall under one company's control, according to Al Jazeera. The lawsuit was originally scheduled for trial in 2027, according to the Everett Post.

Instead of going to trial, the states settled on September 21. The five-year consent decree requires Paramount to release 30 films theatrically per year for the first two years and 32 per year for the next three, keep Warner and Paramount cable-channel negotiations with distributors separate, commit money to a fund for workers displaced by the merger, and create a five-member panel to oversee editorial independence at CNN and CBS.

Martínez-Olguín called the deal a "fair, reasonable, and good faith approach to address the competitive harms," and said it "represents a reasonable factual and legal resolution of the dispute," according to Variety and Yahoo News, which both carried identical reporting from Variety's Todd Spangler. She emphasized the agreement came after "several rounds of in-depth negotiations" between the parties.

Judicial Review and Remaining Questions

Martínez-Olguín made clear at a hearing last week that she wasn't simply going to approve whatever Paramount and the states handed her, allowing groups including the Block The Merger coalition and the League of United Latin American Citizens to file amicus briefs opposing the terms. She also ordered Paramount and the settling states to respond to a letter from Sen. Cory Booker, who wanted a more thorough review.

Critics argued the settlement's conditions were too weak to meaningfully address the market concentration they warned about. When a deal consolidates CNN, CBS, HBO Max, Paramount+, TBS, Food Network, MTV, Nickelodeon, Comedy Central and more under one roof, a handful of film quotas and a worker fund can look thin. But Martínez-Olguín ultimately ruled, per the Everett Post and Breitbart, that those objections "do not rise to the level of legal violations" needed to block the settlement, and she declined to add conditions beyond what Paramount and the states had already negotiated.

One detail worth noting: the settlement's editorial-independence panel for CNN and CBS will have its board appointments controlled by David Ellison, according to Al Jazeera. A government-brokered mechanism that places oversight of two major newsrooms' editorial judgment in the hands of the very executive who now controls them raises questions about how independence will function in practice.

Leadership Shakeup Already Underway

Hours after the ruling, Paramount announced outgoing Mattel CEO Ynon Kreiz will become co-CEO of the combined company effective at closing, joining the board alongside Ellison, according to CNBC. Kreiz departs Mattel after eight years, during which the company released "Barbie," 2023's top domestic box office earner. Ellison will handle long-term strategy and creative direction; Kreiz takes day-to-day operations and integration.

Casey Bloys, who runs HBO for Warner Bros. Discovery, is set to oversee the combined streaming business after Cindy Holland announced Tuesday she's stepping down from running Paramount+, according to Yahoo News. Current WBD CEO David Zaslav is expected to depart once the deal closes, taking with him more than $550 million in stock and cash, including $34.2 million in cash severance, per Yahoo News reporting that cites Variety.

The merger has now cleared regulators in 68 jurisdictions worldwide, including the Justice Department, according to Variety. Barring a last-minute snag, the deal closes October 6. What remains unresolved is whether the five-member editorial panel, the film quotas and the worker fund actually constrain a newly combined company that will control a third of U.S. theatrical and cable output, or whether the settlement simply cleared the way for the consolidation the states originally sued to stop.