On Monday, shares of Warner Bros. Discovery and Paramount-Skydance climbed 10% and 5%, respectively, following news of a settlement agreement between Paramount and state attorneys general.
The settlement resolves antitrust objections raised by the states, which had sought to block the $111 billion acquisition of Warner Bros. Discovery. Under the agreement, the combined company will face financial penalties if it releases fewer than 30 films in theaters annually. According to two sources familiar with the matter, Paramount would pay $30 million for each missing film. The report also indicated that if the threshold cannot be met, Paramount could be forced to divest its 49% stake in Miramax.
Twelve Democratic state attorneys general, along with the Writers Guild of America, had filed an antitrust lawsuit to prevent the Paramount-Skydance acquisition of Warner Bros. Discovery. The plaintiffs argued that the transaction would give Paramount excessive control over the film and cable television industries. Negotiations between Paramount and California Attorney General Rob Bonta have recently accelerated, though a final agreement has not yet been signed.
The acquisition follows a strategic review initiated by Warner Bros. Discovery, which attracted acquisition offers. Warner shareholders have approved the deal, which values the transaction at approximately $111 billion including debt. Upon completion, the entertainment assets controlled by David Ellison, CEO of Paramount and son of Oracle co-founder Larry Ellison, will expand further.
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