Paramount reaches settlement with states on $110B WBD deal, sending shares soaring

Several states agreed to settle a lawsuit against Paramount Skydance (PSKY) over its merger with Warner Bros. Discovery (WBD), sending WBD shares sharply higher. The $110B consolidation will create one of the largest media and entertainment companies in the world (1, 2).

• Paramount originally won its bid for Warner in February 2026 after Netflix (NFLX) dropped a rival bid, clearing the way for the mega-merger (3).
• Several states, with California at the helm, sued in July, arguing that the tie-up would stifle competition in cable TV and film, depress wages, and lift consumer costs. The plaintiffs sought structural changes, including forcing Paramount to spin off CNN (1, 2).
• Concerns over CNN were particularly acute given Paramount CEO David Ellison's ties to President Trump. His father, Oracle (ORCL) chairman Larry Ellison, is one of Trump's largest corporate backers. Democratic-leaning states claimed that a CNN under Paramount's control would have a right-wing bias (1, 2, 4).
• Ultimately, the plaintiffs did not get their wish. CNN will remain part of the combined company, though an independent editorial board — comprised only of journalists — will allegedly oversee the newsroom at both CNN and CBS (1, 5).
• The deal also includes guarantees that Paramount will release 30 films per year to U.S. cinemas and pay a $30M per-film fee if it falls short (1, 2).
• If the deal had failed to close, Paramount would have had to pay $7M per day to WBD shareholders beginning on Oct. 1 (1).
• Market watchers viewed the deal as a huge victory for the combined company. Shares of WBD closed up 11%. Although Paramount initially rose when news of the settlement broke, shares ended up closing down 3% (6).
• The drop in Paramount's share price may have to do with financing. The Ellison family aims to fund the buyout with $47B in new equity (1).
• California's attorney general was under immense political pressure to settle, as prominent politicians in the state feared Paramount moving studios out of Hollywood. Several states expressed deep reservations about the final agreement and agreed to it only reluctantly (1, 2, 7).

Sources & Further Reading

1. "Paramount to Settle Lawsuits, Paving Way for Warner Bros. Merger." Bloomberg. September 21, 2026.
2. "Paramount Reaches Deal to Clear Way to Create News and Media Giant." New York Times. September 21, 2026.
3. "Paramount set for $111bn Warner Bros takeover after Netflix drops bid." BBC. February 27, 2026.
4. "How Larry and David Ellison reached the peak of their wealth – and political power." CNN. September 26, 2025.
5. "David Ellison will get control of CNN after all (and don’t pretend an 'independent editorial board' will mean otherwise)." NiemanLab. September 21, 2026.
6. "Done! Paramount Settles Antitrust Suit, Set To Seal Deal For Warner Bros. Discovery." Deadline. September 21, 2026.
7. "How the Ellisons pulled off Paramount-WBD settlement talks and cleared major hurdle to forging media giant." New York Post. September 21, 2026.