Getty ImagesParamount Skydance has settled a lawsuit with dozens of US states, removing a major hurdle to its $110bn (£82.8bn) merger with Warner Bros Discovery.
California Attorney General Rob Bonta told a news conference that state officials agreed to terms after securing commitments to protect competition across film and television, and broadcasting.
Still, “the settlement is not a vote of support for this merger,” Bonta said. “I don’t think these two companies should merge.”
Paramount chief executive David Ellison hailed the resolution, saying: “Our shared aim was an outcome that best serves consumers, workers and – most importantly -the creative community so vital to the art of visual storytelling.”
Ellison had previously threatened to move studio operations out of California.
The settlement will help boost film production in the US, Bonta said, adding that under the agreement, Paramount must release at least 30 films each year.
To prevent the studio from fulfilling its 30-movie annual quota with low-budget or automated content, Bonta said there are strict guardrails against “AI-generated” films.
Officials wanted to guarantee “real, robust movies” that generate economic activity and put people back to work, he added.
Though Ellison previously indicated the merged company would keep its headquarters in California for the foreseeable future, Bonta clarified that this commitment was not written into the legal agreement.
“It’s not part of the deal,” Bonta said.
To ensure remaining terms are enforced, Paramount has agreed to the appointment of an independent monitor to oversee ongoing compliance with the settlement.
California led the legal push alongside a coalition of state attorneys general from Arizona, Colorado, and New Jersey.
Under the deal’s initial terms, Paramount must ensure 20% of all film production takes place in the US for the first two years, rising over 30% over the following three years.
While mergers typically lead to corporate overlap and redundancies, Bonta maintained that it would be a “job creator” that will put people back to work across the industry.
Thanks to the deal, Bonta said that economic activity would be “$300m to $1.5bn more, at minimum, for film and TV production right here in our country”.
“Importantly, that is the baseline. That is the minimum,” Bonta said, noting that production commitments could surge by up to 700% if Congress passes a federal film tax credit.
