Paramount Skydance has agreed to a sweeping package of concessions and restrictions governing the combined Paramount-Warner Bros. operation for five years as part of its settlement with the states that sued to block the Warner Bros. Discovery acquisition.
The newly filed proposed consent decree reveals the complete scope of the agreement, including mandatory theatrical releases, minimum theatrical windows, increased U.S. production spending, protections for the Paramount and Warner Bros. studio lots, restrictions on cable negotiations, and the creation of an independent board tasked with handling editorial disputes involving CNN and CBS News.
There are also potentially severe penalties for certain violations, including the forced divestiture of Miramax or a collection of cable networks.
Other concessions are considerably less imposing—including a requirement that Paramount continue offering Pluto TV as a free, ad-supported streaming service.
The agreement was reached between Paramount, Warner Bros. Discovery, and 12 plaintiff states: California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.
The states sued in July, alleging that the merger could substantially lessen competition or create a monopoly in three alleged markets. Paramount and Warner Bros. denied that the transaction violates antitrust law, and the settlement does not constitute an admission of wrongdoing.
At Least 30 Movies Must Hit Theaters Every Year
Among the most consequential provisions is a legally enforceable theatrical-output commitment.
The combined Paramount-Warner Bros. must release at least 30 films theatrically in the United States during each of the first two commitment years, followed by at least 32 films per year during years three through five.
At least 20 films during each of the first two years must qualify as wide releases on 2,000 or more screens. That increases to 21 wide releases when the annual requirement climbs to 32 films.
Aang in Avatar Aang: The Last Airbender – Paramount+, Paramount Pictures, Avatar Studios, Nickelodeon Movies
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At least four releases each year must qualify as independent films, and at least 50% of the movies counted toward the annual requirement must be produced or co-produced by the combined company.
Paramount also cannot pad those numbers with old movies.
Films opening on fewer than 600 screens generally don’t count unless they expand to at least 1,000 screens within 30 days. Re-releases, commemorative editions, and repackaged versions of previously released intellectual property are explicitly excluded.
The 45-Day Theatrical Window Is Backed by the Settlement
Movies counted toward the quota must receive a theatrical window of at least 45 days.
The company cannot begin marketing those films as available through PVOD, SVOD, or another streaming platform before day 30, and qualifying movies can’t become available on a subscription streaming service such as Paramount+ for at least 90 days after their theatrical debut.
Russell Crowe in Gladiator – Paramount Movies, YouTube
At least 20% of the annual slate must also meet the agreement’s tentpole requirements.
Those movies must have production and acquisition budgets equivalent to at least $50 million in September 2026 dollars, adjusted for inflation, and must appear on at least 3,000 domestic screens within their first four weekends.
The agreement therefore does more than establish a raw number of releases. It requires a substantial portion of them to receive genuine nationwide theatrical distribution.
A Missing Movie Carries a $30 Million Penalty
The settlement creates an unusual financial penalty if Paramount falls below its annual theatrical requirement.
For every film by which the company misses its annual quota, Paramount must contribute $30 million.
Half of that money goes to selected health care and retirement funds for entertainment unions, 40% goes to the Motion Picture & Television Fund, and the remaining 10% goes to a National Association of Attorneys General antitrust fund.
Even more remarkably, the payment is non-refundable and remains due even if Paramount subsequently makes up the missing release during its cure period.
Shadow in Sonic the Hedgehog 3 – Paramount
For a company operating at the scale of a combined Paramount and Warner Bros., however, $30 million could be considerably cheaper than producing, distributing, and marketing some major theatrical movies.
That doesn’t mean Paramount can simply pay $30 million and walk away from the requirement.
The company receives six months to cure an annual theatrical shortfall. If it still fails to meet its required number of releases, the agreement requires Paramount to divest its entire direct and indirect ownership interest in Miramax Studios.
The potential loss of Miramax is therefore the far more serious enforcement mechanism behind the theatrical commitment.
Paramount Commits Another $1.5 Billion to U.S. Production
Paramount has also agreed to increase domestic production spending.
During each commitment year, the combined company must spend at least $300 million more on U.S. production than Paramount and Warner Bros. spent in 2025.
That translates to at least $1.5 billion in additional U.S. production spending over five years.
Additional domestic production requirements could be triggered by future tax incentives.
A screenshot from the trailer for Scream 7 – YouTube, Paramount Pictures
If the federal government creates an uncapped film tax credit of at least 20%, minimum percentages of the company’s production days would have to occur within the United States.
If California or New York additionally creates the specific uncapped, stackable state incentive contemplated by the agreement, the required U.S. share would rise to at least 40% of film production days.
One important distinction is that the decree does not impose a general requirement that a particular percentage of the combined company’s productions remain in California.
Paramount and Warner Bros. Lots Cannot Be Closed
The agreement does, however, protect both companies’ historic California studio lots.
For the five-year commitment period, the combined company cannot sell or close Paramount’s Melrose Avenue lot or Warner Bros.’ Burbank lot.
It must also use commercially reasonable efforts to continue operating the facilities consistently with past practices, including producing film and television projects and leasing space to third parties.
Logos for Paramount Skydance and Warner Bros. – Paramount, WB
Existing development agreements in plaintiff states must similarly be honored.
The protection guarantees the continued operation of the physical lots during the settlement period, but it does not amount to a broader guarantee against layoffs or reductions in California-based production.
Cable Networks Could Be Divested for Violations
Some of the settlement’s strongest remedies involve basic cable.
Paramount and Warner Bros.’ basic-cable portfolios must generally be negotiated separately with distributors.
The combined company can’t make an agreement involving Warner Bros. channels contingent upon accepting Paramount channels or vice versa, nor can it use confidential affiliate-fee information from one portfolio when negotiating rates for the other.
Cartman as Kathleen Kennedy in South Park – Paramount+
A distributor can voluntarily request combined negotiations in writing, but Paramount is prohibited from soliciting or encouraging that request or conditioning other terms upon it.
An uncured material violation could ultimately result in the company being ordered to divest BET, VH1, Comedy Central, Smithsonian, Destination America, and Science.
That creates another significant potential divestiture remedy alongside Miramax.
CNN and CBS News Will Be Subject to an Independent Editorial Board
The final agreement also provides much more detail about previously reported plans for independent oversight of CNN.
It isn’t limited to CNN.
Within 180 days of closing, the combined company must establish a five-member News Editorial Independence Board consisting of established active or retired journalists with at least 10 years of experience.
No more than two members can be affiliated with the same political party. Government officials cannot serve on the board or possess approval rights over its membership, while company officers, directors, shareholders, and non-journalist employees and contractors are similarly excluded.
A news broadcast on CNN – YouTube, CNN
The board will establish principles based on the existing standards and practices of CNN and CBS News regarding accuracy, independence, fairness, and journalistic integrity.
More significantly, it will be tasked with resolving disputes between CNN or CBS News employees and management concerning alleged violations of those principles.
That expressly includes disputes involving allegations of reporting bias or failure to meet agreed reporting fairness standards.
The board will also monitor adherence to journalistic ethics and editorial independence from the company’s owners and shareholders.
The provision applies to news and editorial content produced principally for U.S. distribution.
Labor Protections Stop Short of Preventing Layoffs
The combined company must honor its existing U.S. collective bargaining agreements and bargain in good faith over successor agreements.
Recognized service, seniority, and accrued status must also be preserved according to applicable collective bargaining agreements.
The decree doesn’t prevent Paramount from laying off employees as the two companies are integrated.
A screenshot from the G.I. Joe Movies – Paramount+
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Instead, workers displaced, laid off, or terminated because of the transaction receive the right to apply for open positions for which they’re qualified. Paramount must consider those applications in good faith.
The company will additionally spend $9.5 million annually for five years on workforce training, career development, and film and community arts programs.
Another $5 million annually will fund purchases of independent films.
Paramount Must Keep Pluto TV Free
Among the more curious concessions is a five-year protection for Pluto TV.
The combined company is required to continue maintaining Pluto TV—or a substantially equivalent successor—as a free, ad-supported streaming service.
Paramount must maintain the service at or above its quality level when the settlement takes effect and implement product and content improvements already contemplated at that time.
In practical terms, one of the concessions extracted from Paramount during negotiations over one of the largest media mergers in history is that the company can’t turn Pluto TV into a paid subscription service during the five-year period.
States Get Up to $40 Million for Their Costs
Paramount and Warner Bros. also agreed to reimburse the plaintiff states for up to $40 million in reasonable attorneys’ fees and economic-expert expenses incurred through the effective date of the settlement.
The states can use the money for purposes including future antitrust and consumer-protection enforcement, subject to applicable state laws.
Kel Mitchell and Kenan Thompson in the Good Burger 2 trailer – Paramount Plus, YouTube
In exchange, the states discharge the defendants from their competition claims, related consumer-protection claims, and known related investigations arising from the merger and its ancillary transactions.
Most of the Restrictions Last Five Years
The scope of the agreement is extensive, but its duration is important.
The decree establishes five commitment years following the calendar year in which the transaction closes. A 2026 closing, for example, would result in commitment years running from 2027 through 2031.
And Paramount could potentially seek modifications before those five years expire.
After completing the second full commitment year, the combined company can petition the court for relief or modification for good cause.
Sonic, Knuckles, and Tails from the Sonic The Hedgehog 3 Trailer – Paramount Pictures
Paramount would bear the burden of demonstrating that the existing requirements impair its ability to successfully operate and compete and that the requested change isn’t substantially likely to lessen competition.
An independent Monitoring Trustee will oversee compliance with most of the decree and provide semiannual reports to the states. The monitor can obtain access to relevant personnel, records, and facilities but explicitly has no authority over the company’s news operations or selection and production of content.
The full agreement finally puts numbers and enforcement mechanisms behind concessions that had previously been discussed largely through leaks and reports from settlement negotiations.
With the settlement now spelled out on paper, the remaining question is no longer what Paramount offered to secure an agreement with the states. It’s how much these restrictions will actually constrain the entertainment giant once Paramount and Warner Bros. become one company.
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