Updated version 2 - According to Bloomberg, Paramount has reached a settlement with California and other states regarding the Warner Bros. acquisition case.

Additional background information

Reuters, September 21 - According to a Bloomberg report on Monday citing a person familiar with the matter, Paramount Skydance PSKY.O has reached a settlement with California and other states that attempted to block its $110 billion merger with Warner Bros. Discovery WBD.O.

The report stated that four states that had previously opposed the terms proposed by California made concessions over the weekend, allowing settlement negotiations to progress. Bloomberg added that the settlement agreement is expected to be announced later today.

Paramount Skydance and Warner Bros. Discovery have not immediately responded to Reuters' requests for comment.

The settlement will remove a major obstacle to the completion of one of the largest media merger deals in history, allowing Paramount to advance the merger, bringing together two of Hollywood’s top film studios, two major streaming services, and two leading cable news organizations under one owner.

After the Bloomberg report was published, shares of Warner Bros. Discovery rose further, now up nearly 10%. Paramount's stock pared some gains, now last up around 7%.

The Wall Street Journal reported on Sunday that Paramount and the California Attorney General have discussed a series of compromise plans (link), including investing $1.5 billion in the state for film and television production, pledging not to sell the studio lots of either company, and the potential penalties Paramount would face if it fails to fulfill the post-merger commitment to produce 30 films annually.

According to the Wall Street Journal, other measures under consideration include the sale of certain cable TV channels and the establishment of a committee to ensure CNN maintains editorial independence.

Bloomberg reported on Monday that, as part of the settlement with the states, Paramount has agreed to establish independent editorial boards for both CBS and CNN.

A coalition of 12 state attorneys general, led by California Attorney General Rob Bonta, filed a lawsuit in July seeking to block the merger, arguing that the deal would weaken competition in theatrical film distribution and basic cable channel licensing.

The settlement will help Paramount avoid paying a daily $7 million penalty to Warner Bros. Discovery shareholders for failing to complete the deal by September 30.

Antitrust regulators from other global jurisdictions, including the European Union and the United Kingdom, have approved the acquisition.

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