Shares of Warner Bros Discovery and Paramount Skydance surged in premarket trading on Monday after a report indicated that Paramount and California’s attorney general were in advanced settlement talks. A potential agreement could resolve one of the final regulatory hurdles to the companies’ proposed $110 billion merger, which aims to create a major competitor to Netflix and Disney.
According to The Wall Street Journal, the discussions involve several potential concessions, including a $1.5 billion investment in California production, commitments not to sell either studio lot and possible penalties if Paramount fails to meet its pledge to produce 30 movies annually after the merger. Other measures under consideration reportedly include selling certain cable channels and establishing a board to help safeguard CNN’s editorial independence. Warner Bros Discovery shares rose 7.9%, while Paramount gained 6.8%, potentially adding a combined $6.30 billion to their market valuations if the gains hold.
The lawsuit filed by California and 11 other states remains a key obstacle to the merger. A settlement could help Paramount CEO David Ellison advance the proposed deal while avoiding a $7 million daily fee payable to Warner Bros shareholders for each day the transaction remains unclosed beyond September 30. The talks come as Paramount seeks to overcome legal challenges and secure the merger’s completion.
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