The Paramount-Warner Bros. Discovery merger has finally cleared what appears to be its last major legal obstacle — and the decision came almost literally at the eleventh hour.
U.S. District Judge Araceli Martínez-Olguín on Wednesday approved the settlement between Paramount Skydance and the coalition of 12 state attorneys general that had sued to block the massive transaction, clearing Paramount to move forward with its acquisition of Warner Bros. Discovery.
The decision arrives on September 30, just hours before an October 1 deadline that has loomed over the increasingly contentious legal battle.
Paramount had been racing against that date because the merger agreement calls for a reported $7 million-per-day “ticking fee” if the transaction remains unfinished beyond the deadline. The court’s approval removes the legal barrier before that clock begins running, though Variety reports that Paramount is currently targeting October 6 to formally close the transaction.
In other words, Paramount may still end up paying several days’ worth of the fee. But the much larger threat — having its $110 billion acquisition trapped in litigation for months — is effectively gone.
Judge Rejects Last-Minute Push Against Settlement
The ruling comes after Martínez-Olguín delayed approving the agreement last week amid objections from merger opponents.
The Block the Merger coalition had successfully asked the court for permission to submit briefs challenging the settlement, while Sen. Cory Booker also urged the judge to conduct a more extensive public-interest review. Martínez-Olguín subsequently ordered Paramount and the state attorneys general to respond to those concerns before she made her decision.
Ultimately, those objections weren’t enough.
“These hopes and desires for the proposed consent decree to reach farther — to achieve more — do not rise to the level of legal violations upon which the court can reject the parties’ negotiated resolution,” Martínez-Olguín wrote in Wednesday’s order.
Paramount Pictures Logo – YouTube, ClosingLogosHD
The judge characterized the settlement as a “reasonable factual and legal resolution.”
That represents a remarkable turnaround from where the merger stood just two months ago.
In July, the 12-state coalition had secured an agreement preventing Paramount from completing the acquisition while its antitrust challenge proceeded. California Attorney General Rob Bonta called the delay a “tremendous win” at the time, while New York Attorney General Letitia James said the states intended to continue their effort to stop what they alleged was an illegal merger.
Instead, the states settled.
Paramount Agreed to Major Concessions
The September 21 settlement imposes a series of conditions on the combined company for five years.
Among the most significant is a theatrical film quota requiring the company to release at least 30 movies annually during the first two years and at least 32 annually during years three through five. The company faces a $30 million penalty for each film it falls short of the requirement.
A screenshot from CNN – YouTube, CNN
The settlement also includes a minimum $1.5 billion commitment toward additional domestic film production and establishes a $47.5 million fund for workers affected by the merger. It additionally places restrictions on negotiations involving Warner-owned cable networks.
Paramount also agreed to establish an editorial board intended to preserve independence at CBS News and CNN. Martínez-Olguín rejected arguments that the provision raised First Amendment problems when approving the agreement.
Critics of the settlement had argued that the concessions didn’t go far enough, but those arguments ultimately failed to persuade the court.
The Merger Can Finally Close
The significance of Wednesday’s ruling is difficult to overstate.
Paramount previously said it had already satisfied every closing condition under its merger agreement and secured regulatory clearances from authorities representing 69 jurisdictions. As recently as September 8, the company identified the lawsuits brought by the states and the Writers Guild of America as the only remaining barriers preventing it from completing the transaction.
Both disputes have now been settled, and the state settlement has received the court approval necessary to take effect.
That clears the way for David Ellison’s Paramount to absorb Warner Bros. Discovery and create one of the largest entertainment companies in the world, bringing Warner Bros., HBO, CNN, DC, CBS, Paramount Pictures, and numerous other entertainment properties under the same corporate umbrella.
The timing could hardly have been tighter.
David Ellison talks to Bloomberg – YouTube, Bloomberg Podcasts
Only six days ago, Martínez-Olguín was still asking questions about the agreement and allowing outside opponents to make their case against it. Paramount was simultaneously preparing a gigantic financing package while staring down the October 1 ticking-fee deadline.
Now the legal roadblock is gone.
The court’s approval doesn’t mean the merger itself officially closed on September 30. Paramount is eyeing October 6 for the actual closing, which would put the transaction several days beyond the deadline and potentially trigger the daily payments required under the merger agreement.
But after months of litigation, injunction fights, settlement negotiations, and last-minute attempts to persuade the court to reject the deal, the central question surrounding the Paramount-Warner Bros. Discovery merger appears to have been answered.
The merger can now proceed.
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