Key Highlights

  • Paramount settled the antitrust suit brought by 12 states led by California on Sep 21, agreeing to theatrical release quotas, at least $300 million a year in extra US production and an editorial board for CNN and CBS News.
  • WBD closed at $30.83 on Sep 22, about 0.6% below Paramount's $31 per share deal price, after jumping about 10% on the settlement news.
  • A federal judge will hold a hearing on the proposed consent decree on Sep 24; Paramount CEO David Ellison has told staff he aims to close in about two weeks, a timeline that could run slightly past Sep 30, when a ticking fee begins to accrue.
  • WBD reported Q2 Revenue of $8.7 billion, down 12% excluding currency effects, with net Debt of $29.7 billion; the combined company's total debt could reach $87 billion.

Paramount Skydance's (NASDAQ:PSKY) settlement with a coalition of state attorneys general removes the last major obstacle to its Takeover of Warner Bros. Discovery (NASDAQ:WBD). For WBD shareholders, it sharply narrows the path to the $31 per share Paramount agreed to pay. The deal, which values WBD at about $110 billion including debt, had been stalled since 12 states led by California Attorney General Rob Bonta sued in July to block it on antitrust grounds. That case had been set for a trial in March, which could have left the deal in limbo until mid-2027.

The market reaction was immediate. WBD shares gained about 10% on Sep 21 to trade near $30.50 and closed at $30.83 on Sep 22. That leaves a gap of about 17 cents, or roughly 0.6%, to the deal price. It is the kind of narrow spread investors usually accept when they see closing as highly likely and close at hand.

Timing is now the key variable. Paramount CEO David Ellison told employees the company aims to close in about two weeks, according to an internal memo. The settlement still needs court approval, and a federal judge has scheduled a hearing on the proposed consent decree for Thursday, Sep 24.

The Concessions Paramount Accepted

Bonta outlined the terms at a Sep 21 press conference. Paramount agreed to increase US production spending by at least $300 million a year and to keep both the Paramount and Warner Bros studio lots in Los Angeles. If a federal film tax Credit is approved, 20% of its films must be produced domestically in the first two years after closing and 30% in the three years after that.

The combined studio must release at least 30 films theatrically a year for two years and 32 a year for the following three, including independent productions. Shortfalls carry a $30 million penalty per film, with 90% going to workers. Bonta said Paramount could also be forced to divest Miramax if it misses the release goal. The two companies must keep negotiating cable packages separately, or face a forced sale of a group of cable channels. A new board will oversee editorial independence at CBS News and CNN, and a Trustee will monitor compliance.

Bonta stressed that the agreement "is not a vote of support for this merger." The Writers Guild of America, which had filed a separate suit, also settled, though it said it still believes the Merger will damage writers and the industry.

Why the Timing Matters to WBD Holders

The merger agreement includes a ticking fee that would have added 25 cents per share per quarter for WBD shareholders if the deal had not closed by Sep 30, an estimated $650 million per quarter in added cash value, or roughly $7 million a day. Paramount had earlier agreed to delay closing to as late as June 2027 while the litigation played out, a scenario that could have cost it close to $2 billion in fees.

A fast close would lock in the $31 price but limit any fee-related upside for WBD holders. It would also end WBD's life as a standalone listed company. Shareholders would receive the deal consideration and would not share in any future gains, or losses, of the combined company.

How the Deal Came Together

The path here was long. Ellison made a series of hostile bids for WBD after Skydance closed its $8 billion Acquisition of Paramount. The pressure pushed WBD to put itself up for sale. In December 2025, WBD agreed to sell its studio and streaming Assets to Netflix (NASDAQ:NFLX). Paramount kept raising its offer, and WBD ultimately switched to Paramount's richer bid for the whole company. Netflix declined to counter and collected a $2.8 billion breakup fee.

Paramount signed a definitive agreement in February valuing WBD at about $81 billion in Equity and $110 billion in enterprise value, funded by roughly $47 billion of equity and $54 billion of debt. The US Department of Justice cleared the deal in June, and approvals followed in the European Union, the UK and other jurisdictions. Last week the Federal Communications Commission allowed sovereign Wealth funds from Saudi Arabia, Qatar and the United Arab Emirates to hold a combined 49.5% non-voting stake in the merged company.

WBD's Standalone Business in Context

WBD's latest results show why a $31 exit appeals to many holders. In its Aug 6 second-quarter report, the company posted revenue of $8.7 billion, down 12% excluding currency effects. Advertising revenue fell 22%, with the loss of NBA rights accounting for about 20 points of that decline, and content revenue fell 26% on weaker theatrical results. Distribution revenue rose 1% as streaming subscriber growth offset linear pay-TV losses.

Adjusted EBITDA fell 6% to $1.9 billion as Streaming gains were more than offset by declines in Studios and Global Linear Networks. Free Cash Flow was $572 million, and the company reported net debt of $29.7 billion, or 3.4 times net leverage.

The combination would bring together two major film studios, CBS, CNN, a large cable portfolio and the Paramount+ and HBO Max streaming services. Paramount argues it needs that scale to compete with Netflix, Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL) and Disney (NYSE:DIS).

Risks Before the Deal Closes

The remaining risks are mostly procedural, but they are real. The court could question or delay approval of the consent decree. Judge Araceli Martinez-Olguin said the Sep 24 hearing will address outstanding questions about the decree's factual and legal basis and how it will be carried out. Opposition remains loud. Connecticut Attorney General William Tong said he was disappointed the states could not secure a divestiture of CNN and CBS News, and advocacy groups have criticized the settlement.

For the combined company, the bigger risks are financial. Total debt could reach $87 billion, and Paramount has promised investors about $6 billion in cost savings, which industry groups expect to mean significant layoffs. The theatrical release commitments are demanding; no studio has put out more than 25 wide releases in a single year in the past quarter-century.

The Final Countdown to Closing

The Sep 24 court hearing is the immediate catalyst. After that, investors will watch for a formal closing announcement, which Ellison has signaled could come around early October, and for WBD's delisting from the Nasdaq and removal from the Nasdaq-100. Because that timeline extends past Sep 30, a small portion of the 25-cents-per-quarter ticking fee could accrue before closing. Until the deal closes, WBD shares are likely to trade mainly on deal timing rather than on the company's operating results.