The US court has approved the settlement agreement between Paramount Skydance and several state governments, clearing the final legal obstacle for Paramount to acquire Warner Bros. Discovery for approximately $110 billion. The deal is expected to be completed on October 6th.
On Wednesday, September 30th, Judge Araceli Martínez-Olguín of the US Federal District Court in California approved the settlement agreement reached between Paramount Skydance and 12 state governments. California and other states had previously filed lawsuits to block the deal, citing concerns about its potential impact on market competition.
According to the settlement plan unveiled on September 21st, the merged company will release at least 30 films annually in US theaters for the first two years following the merger, increasing to at least 32 films per year for the subsequent three years. Additionally, an extra $300 million will be invested annually in US film production over the course of five years. The agreement also includes the establishment of a $47.5 million fund to assist workers in the film and television industry affected by the transaction, as well as restrictions on cable television business negotiations.
Furthermore, the settlement requires the establishment of an independent oversight mechanism composed of journalists to monitor the editorial independence of CBS News and CNN. Following the court’s approval, Paramount stated that the transaction is expected to be completed on October 6th.
In February of this year, Paramount Skydance announced plans to acquire all shares of Warner Bros. Discovery for $31 per share in cash, valuing the transaction at around $110 billion. If the deal is completed after September 30th, Warner Bros. Discovery shareholders will receive additional “delay fees.” According to the terms of the transaction, the delay fees will be calculated at $0.25 per share per quarter, exceeding $600 million every three months.
Upon completion of the deal, Paramount’s assets such as Paramount Pictures, CBS, Nickelodeon International, Paramount+, and Pluto TV will merge with Warner Bros. Discovery’s businesses including Warner Bros. Studios, HBO Max, CNN, and Discovery.
Previously, various jurisdictions in the US and the European Union had approved the related transactions. The European Commission officially approved the acquisition in July, with Paramount indicating that the deal had also received competition review approvals in markets such as Australia, Canada, China, and Brazil.
Following the court’s approval, Paramount Skydance CEO and majority shareholder David Ellison announced that Ynon Kreiz, former CEO of Mattel, will join the merged company as co-CEO. According to the arrangement, Ellison will oversee the company’s long-term strategic, creative, and technological direction, while Kreiz will primarily handle day-to-day operations and the integration of the two companies. Kreiz is set to join the company on October 5th, with the completion of the transaction scheduled for the following day.
Paramount has stated that the merged company will advance the integration of film production, television operations, and streaming services. The company had previously proposed that the merger would result in over $6 billion in cost savings.
After the merger, the two companies will need to further determine the integration of Paramount+ and HBO Max, including whether they will merge into a single streaming platform and the future service and pricing arrangements. These details are currently not fully finalized.