Under the settlement, Paramount will spend at least $300 million more each year on US film production and meet theatrical-release targets for five years

The $110 billion Paramount–Warner Bros. merger is back on track after 12 states, including California, settled yesterday, ending the antitrust lawsuit they’d filed to block the deal.

The agreement still needs court approval, but the companies expect to close it in early October.

The deal faced opposition over concerns that combining the companies could reduce competition, hurt Hollywood jobs and give the merged company greater control over movies, television, streaming and news. 

The companies estimate the merger could generate $6 billion in savings over three years, while the combined business is expected to carry about $80 billion in debt, which includes the $54 billion Paramount took on to buy Warner Bros.

Under the settlement, Paramount will spend at least $300 million more each year on US film production and meet theatrical-release targets for five years. Paramount agreed to pay a penalty if it fails to produce 30 films annually for the first two years and 32 in each of the next three.

It must also deliver at least four independent films each year for the next five years.

Paramount will also create an editorial independence board for CBS and CNN and freeze theater fee increases for three years.

Paramount also agreed to stay in California, keeping its LA studio lot and the Warner Bros. lot for at least five years. The company had earlier threatened to pull its headquarters and thousands of jobs out of state if regulators didn’t approve the deal by next month.

The states’ lawsuit was the last major obstacle to the merger. The deal has already secured regulatory clearance in the UK, Europe, China, Australia, and several other markets. Paramount says authorities in 66 jurisdictions have either approved the transaction or chosen not to challenge it.

The settlement also helps Paramount avoid a $7 million daily fee it would have owed Warner Bros. if the deal extended beyond October 1.

The merger would combine Paramount Pictures, CBS and Paramount+ with Warner Bros., HBO, CNN and other major networks.