State AGs Who Called Paramount-Warner Bros. Merger Unlawful Now Settle, Clearing The Way For Deal

In July, California Attorney General Rob Bonta and 11 other state attorneys general sued to block Paramount Skydance’s acquisition of Warner Bros. Discovery. They said the deal would eliminate competition between two major studios, leaving filmmakers with fewer buyers and workers with fewer job opportunities.

Two months later, the states have now settled, clearing the way for what could be one of the most significant mergers in modern media history. Paramount is poised to get Warner Bros., and the public will get five years of production promises, a workforce training fund, and a lesson in what happens when a company can threaten to take jobs elsewhere.

For animation, the deal puts Paramount Animation, Nickelodeon Animation Studio, and Skydance Animation under the same owner as Warner Bros. Pictures Animation, Warner Bros. Animation, Cartoon Network Studios, and Hanna-Barbera Studios Europe. They serve different audiences, but they draw on overlapping pools of artists, writers, directors, and outside studios.

The terrifying takeaway here is that, despite all of the paltry promises in their settlement with the states, Paramount and Warner Bros. will stop competing as buyers of content and job creators. The industry is about to get far less friendly towards artists and workers.

The Price of Settling

Under the agreement, Paramount must release at least 30 films a year for two years and 32 a year for the following three. It must spend at least $300 million more annually on U.S. production than the two companies spent in 2025. It will also put $47.5 million over five years toward workforce training and career programs, and a laughably minuscule $25 million toward buying independent films. There are penalties if Paramount misses its film targets.

Some of that spending could theoretically create work, but Paramount is also promising $6 billion in annual savings. Combining two companies with overlapping operations on that scale will almost certainly mean major job losses. An L.A. County analysis estimated that roughly 4,500 direct film and television job-years (not individual layoffs) could be at risk during the merger’s three-year integration period.

The agreement also says nothing about AI. Bonta argued that the requirement for big-budget films would help ensure productions employ people, while acknowledging that lower-budget films could use generative AI. That is a remarkable gap in a deal being sold, in part, as a jobs measure.

Take My Ball And Go Home

The states negotiated against a deadline and an ultimatum from a billionaire family that refused to take “no” for an answer. Paramount reportedly faced a fee of roughly $7 million a day if the merger remained unfinished after September 30. Facing those fines, CEO David Ellison threatened to move Paramount operations out of California.

The threat seems to have worked. The Hollywood Reporter published that Newsom, concerned about jobs and the state’s reputation, encouraged a settlement. The new agreement requires the companies to keep their studio lots operating, but, importantly, does not require Paramount to keep its headquarters in California. That said, Ellison recently stated that he loves L.A. and plans to stay. For whatever that’s worth.

The lesson is hard to miss for the next media company facing a state challenge. Employ enough people, then threaten to unemploy them, and the officials who called your deal unlawful may end up folding like freshly washed laundry.

Perhaps that’s harsh. Bonta says settling is not an endorsement of the merger. At Monday’s press conference, he was blunter still, saying, “I don’t think these two companies should merge, but that’s not something that we are focused on with our resolution here.” Regardless, he is the figurehead that cleared the way for the merger if/when it happens.

The states may have secured more production for the next five years, but they also cleared the way for two major buyers to become one. When those promises expire, the lost competition will still be gone, and an ugly new precedent will remain.