Exclusive: Sources say Paramount may reach a settlement with states over Warner Bros. as early as this weekend

Background information is added in paragraphs 7 to 14

Jody Godoy

Reuters, September 19 - According to sources briefed on the matter, Paramount PSKY.O and the states attempting to block its $110 billion acquisition of Warner Bros. WBD.O could reach a settlement as early as this weekend, with independent content oversight for CNN as one of the terms under discussion.

Sources said that a commitment to the number of theatrical releases is also among the terms being discussed for the settlement agreement.

After market close, Paramount shares rose nearly 7%. Warner Bros. Discovery shares gained 8.4% in after-hours trading.

The lawsuit, brought by California and 11 additional states, is one of the last obstacles on Paramount’s path to becoming a major rival to Netflix (NFLX.O) and Disney (DIS.N). Settling this week could help Paramount avoid paying millions of dollars in fees to Warner Bros. shareholders.

A spokesperson for the California Department of Justice said that any potential settlement negotiations are confidential. “We cannot confirm or deny whether settlement talks are taking place, or the substance allegedly being discussed,” the spokesperson said.

Paramount declined to comment.

Paramount CEO David Ellison is betting the company’s future on what he sees as a crucial move—integrating two of Hollywood’s top studios and merging extensive television assets. Meanwhile, he and others in Hollywood are striving to cope with a decades-long market decline.

The merger would bring together a range of valuable media assets, including CNN, HBO, “Harry Potter,” “The Daily Show,” as well as the broadcasting rights for National Football League (NFL) games.

From September 30 until the deal is complete, Paramount is required to pay Warner Bros. shareholders a “ticking fee” of $7 million per day. This additional incentive is meant to instill confidence among Warner investors.

Regulators under the Trump administration have approved this transaction, but in July, several states filed suit to block the deal (link), arguing that the combined company would become a media giant with the power to increase movie and TV prices.

The Writers Guild of America has also filed suit seeking to block the deal, saying it would result in lower compensation and worse working conditions for scriptwriters.

When asked whether the Guild was involved in negotiations with Paramount and the states, a spokesperson for the Writers Guild of America did not immediately respond to a request for comment.

Other potential settlement terms remain undetermined. California Attorney General Rob Bonta stated that structural remedies, including divestitures (link), are more effective in protecting competition than corporate promises to take certain actions.

Ellison has previously pledged that the merged film studio would release 30 films a year.

Legislators have criticized Ellison (link), accusing him of manipulating reporting at Paramount’s CBS News outlet to favor President Donald Trump. Critics worry about how he might manage CNN, should it come under Warner’s ownership.

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