Oregon and 11 other states reached a settlement Monday in their lawsuit challenging Paramount Skydance’s acquisition of Warner Bros. Discovery, clearing a major legal obstacle for a merger that would bring two Hollywood studios, CNN and CBS News under one owner.
The agreement, filed September 21 in federal court in Northern California, awaits a judge’s approval. It requires the combined company to release more films in theaters, increase U.S. production spending, support entertainment workers and keep the two companies’ basic cable channels separate during negotiations with television distributors. It also calls for an editorial independence board covering CNN and CBS News and an independent monitor to oversee the company’s compliance.
The states sued in July, alleging the merger would reduce competition in film distribution and cable television. Their complaint warned that fewer movies could reach theaters and that the combined company could gain greater power over the prices paid to carry its channels. The states also raised concerns about the variety of films available to audiences. Paramount and Warner Bros. Discovery deny violating antitrust law and admitted no wrongdoing in the settlement.
Under the proposed decree, the combined company must release at least 30 films a year during its first two full calendar years after closing and 32 a year for the next three. At least four releases each year must qualify as independent films. Twenty of the annual releases in the first two years, and 21 in each of the following three, must reach at least 2,000 theater screens. The company must produce or jointly produce at least half of the films counted toward its annual targets and contribute $5 million a year to a fund that purchases independent films.
Films counted toward those targets must stay exclusive to theaters for at least 45 days and cannot appear on a subscription streaming service until at least 90 days after their theatrical debut. At least 20 percent of each year’s films must meet the agreement’s large-budget criteria and reach 3,000 domestic screens within their first four weekends. Missing an annual release target could cost the company $30 million per film and, under the decree’s enforcement process, require it to sell its ownership interest in Miramax Studios.
The company must also increase U.S. film production spending by at least $300 million a year above the two companies’ 2025 level, adding at least $1.5 billion over five years. The settlement commits another $47.5 million over that period to workforce training, career development, and film and community arts programs. Existing union agreements must be honored, and the company must bargain in good faith with labor organizations. Employees displaced by the merger may apply for available positions for which they qualify, and the company must consider their applications in good faith.
Oregon Attorney General Dan Rayfield joined the challenge citing concerns about consumer costs, competition and the state’s film industry. The domestic production commitment applies nationwide; the agreement assigns no specific share of that work or spending to Oregon. During the five-year commitment period, the combined company must also maintain the existing Paramount and Warner Bros. studio lots.
For five years, Paramount’s basic cable channels and Warner Bros. Discovery’s basic cable channels must be negotiated separately with television distributors. The provision addresses the states’ claim that combining the channel groups would strengthen the company’s bargaining position. The agreement does not set cable rates or require distributors to lower customer bills. It also requires the company to maintain a free, advertising-supported streaming service comparable to Pluto TV.
CNN and CBS News would come under a five-member editorial independence board within 180 days of the merger’s closing. The members must be experienced journalists appointed by the combined company’s directors. Their duties include establishing editorial principles and resolving certain disputes between newsroom employees and management over reporting standards, bias and editorial independence. Government officials cannot serve on the board or approve its members, and no more than two board members may be affiliated with the same political party.
An independent monitor would oversee compliance with the decree. The merger’s opponents have agreed to resolve their lawsuit under those conditions, but the settlement will not take effect unless the federal judge approves it.