Paramount Skydance and the state attorneys general who sued to block its merger with Warner Bros. Discovery have agreed to a settlement, allowing the merger to proceed, The Wall Street Journal reported.  

The companies cannot sell their namesake studio lots in Los Angeles for the first five years after the deal, under the terms of the settlement. Additionally, the combined company must uphold any outstanding contracts it had to lease or develop studio facilities in any of the states involved within the first five years following the merger. 

The settlement does not require the combined company to stay in California, a possibility that Paramount CEO David Ellison had raised during the antitrust suit. Paramount relocating its headquarters and operations out of California could result in $1B to $2B in losses for the state in just the next five years, according to a report from the Los Angeles County Economic Development Corp.

The antitrust lawsuit from a dozen states, led by California Attorney General Rob Bonta, would have gone to trial in March and could have delayed the merger until at least the middle of next year. The settlement removes the largest hurdle to the merger closing, as regulators in the U.S. and abroad have approved it, the WSJ reported. 

The terms of the settlement include a minimum theatrical release of 30 movies a year for the merged company and a requirement that the new company spends at least $1.5B on production in the U.S. in the five years after the merger closes, an amount representing a $300M increase over what the companies spent individually on production in 2025. 

“Today, we have secured a settlement that resolves our antitrust concerns of the Warner Bros./Paramount merger — concerns that the merger will lower output and increase prices — by guaranteeing massive investment in domestic film production and providing enforceable guardrails to help keep cable prices competitive,” Bonta said in a statement. 

But Bonta also underscored what the settlement didn’t do. 

“Let me be clear: This settlement is not a vote of support for this merger,” he added.

The union of Paramount and Warner Bros. Discovery would bring a suite of TV networks, the CBS network and streaming services Paramount+ and HBO Max under one umbrella. It would also unite a portfolio of studio and office real estate, including millions of square feet of studio lots and leased office space.

Warner Bros. owns a 2.6M SF film and television complex in Burbank, California, which holds 31 soundstages and 11 sets on the 110-acre main lot. Another Warner Bros. Burbank facility has 16 soundstages and is the television base for the 2028 Olympics. In the UK, Warner Bros. owns a 1.3M SF complex northwest of London with 350K SF of soundstages and a 100-acre back lot.

Paramount Skydance owns the 1.2M SF Paramount lot on Melrose Avenue in Hollywood, a legendary property that includes roughly 30 soundstages. Globally, Paramount and its affiliated companies, including Viacom and CBS, occupy 8M SF. Its top landlords are Hudson Pacific Corp., Hackman Capital Partners, Kilroy Realty, Pimco Prime Real Estate, Goodman Group and Worthe Real Estate, according to CoStar News. Paramount also owns 2.1M SF across 14 properties, according to CoStar News. 

The delay to the Paramount/Warner Bros. merger began in July when the attorneys general filed an antitrust lawsuit to halt it, arguing that a merger of the media companies would harm competition between the two in a way that would negatively impact movie theaters, cable distributors and consumers.