NCCapital

Paramount is discussing a potentially sweeping settlement with California Attorney General Rob Bonta that could remove one of the biggest remaining obstacles to its proposed merger with Warner Bros. Discovery. Among the concessions under consideration is a $1.5 billion commitment to film and television production in California, according to The Wall Street Journal, citing people familiar with the negotiations.

The discussions come as Paramount attempts to resolve an antitrust lawsuit brought by California and 11 other states seeking to block the combination. The states have argued that bringing the companies together would create a media giant with enough market power to raise prices and weaken competition across film and television.

Paramount and Warner Bros. Discovery have described the transaction using different valuation measures. The Wall Street Journal has characterized the proposed merger as an $81 billion deal, while Reuters has reported an approximately $110 billion value when debt is included. Either way, the transaction would rank among the largest media consolidations in recent history.

Beyond the proposed $1.5 billion California production investment, Paramount has reportedly discussed committing to remain in the state and keeping both companies’ studio lots rather than selling them after the merger. Those provisions could address concerns about the potential impact of consolidation on California’s entertainment industry and production economy.

Another major element involves Paramount’s earlier pledge to produce 30 movies annually following the combination. Negotiators have discussed imposing consequences if the company fails to meet that commitment, including a potentially significant penalty: requiring Paramount to divest its stake in Miramax.

The negotiations could also affect some of the most recognizable television properties involved in the transaction. According to reports, potential concessions include selling certain cable channels and creating an independent board designed to help safeguard CNN’s editorial independence after the merger.

CNN has emerged as a particularly sensitive part of the discussions because the transaction would place the news organization under the same corporate umbrella as Paramount’s existing media operations, including CBS. Reuters previously reported that independent monitoring of CNN and commitments involving theatrical film releases were among the settlement terms being considered by Paramount and the states.

No settlement has been finalized, and the California attorney general’s office has declined to confirm the substance of the negotiations. A spokesperson told Reuters that potential settlement discussions are confidential and therefore could not be confirmed or denied. Paramount also had not publicly confirmed the reported terms.

The pressure to reach an agreement is substantial. Paramount has said delays beyond a September 30 deadline trigger roughly $7 million per day in payments to Warner Bros. Discovery shareholders, creating a significant financial incentive to resolve the remaining legal challenges as quickly as possible.

Paramount CEO David Ellison has made the Warner Bros. Discovery acquisition central to his strategy for building a larger entertainment company capable of competing across theatrical releases, television and streaming. A completed transaction would bring major properties including HBO, CNN and Warner Bros. alongside Paramount’s existing portfolio.

Investors responded quickly to signs that the regulatory fight could be moving toward a resolution, with shares of both Paramount and Warner Bros. Discovery rising Monday following reports of the advanced settlement discussions. The proposed concessions show just how much Paramount may be willing to commit to secure the deal: billions in California production, protections for studio operations, movie-release requirements and potential safeguards surrounding CNN. Whether those promises are enough to resolve the states’ antitrust concerns now depends on the final terms of any settlement.