Paramount Skydance’s roughly US$110 billion acquisition of Warner Bros. Discovery, announced in February this year, has been stalled for nearly seven months — but progress is now reportedly in the works. According to sources familiar with the matter, Paramount is negotiating a settlement with a coalition of 12 US state governments seeking to block the deal, with an agreement possible as early as this weekend or next Monday (Sept. 21). The terms include establishing an independent content oversight mechanism for CNN and committing to maintain a certain number of theatrical film releases.
The biggest legal obstacle to the deal is the antitrust lawsuit filed by the coalition of 12 states, including California. The state governments argue that once the deal is completed, the merged company could gain excessive market power in the film and television markets, harming industry competition. If Paramount reaches a settlement with the states, it could not only avoid further litigation proceedings but also reduce the costs arising from the deal’s delays.
However, negotiations are still ongoing and the specific terms have yet to be finalized. The California Department of Justice said the talks are confidential and it could neither confirm nor deny whether they are taking place, while Paramount declined to comment.
The editorial independence of CNN’s news content is one of the key points in the negotiations. CNN is Warner Bros. Discovery’s main news asset, and the state governments are concerned about whether Paramount would influence CNN’s news content and editorial operations after the deal closes. The two sides are also discussing the number of future theatrical film releases, but no specific figures or deadlines have been announced.
Meanwhile, the delay itself has put considerable financial pressure on Paramount. The company said that if the acquisition is not completed by Sept. 30, it will incur a “ticking fee” of about US$7 million per day. Under the current schedule, a trial could begin as late as March next year, with legal proceedings extending into April, by which time the non-recoverable fees payable to Warner Bros. Discovery shareholders could accumulate to US$1.3 billion. Paramount has also previously asked the state governments to post a US$1.88 billion bond to cover potential losses should the deal be delayed by an injunction but ultimately not blocked.
Just one day before news of the settlement emerged, the US Federal Communications Commission (FCC) had already approved Paramount’s application regarding its foreign investment structure, easing foreign ownership restrictions on the merged company. The FCC agreed to allow individual foreign investors to hold up to 20% of shares and waived the original 25% foreign ownership cap, provided they hold no voting shares and do not influence the company’s content decisions or management.
Paramount said that after the merger is completed, the family of Oracle co-founder Larry Ellison and asset management firm RedBird Capital Partners will hold 100% of the voting rights, an arrangement finalized after a US national security review.
The US Department of Justice has already approved the deal, making the state governments’ lawsuit the main obstacle to its completion. In addition to the 12-state coalition, the Writers Guild of America has also filed a legal challenge against the deal. If a settlement is ultimately reached, the CNN content oversight and theatrical film release commitments could become the key conditions for Paramount to allay the states’ concerns. But even if an agreement is reached, the related legal proceedings must still go through the courts, and whether this US$110 billion media merger can be completed smoothly remains to be seen.
