Paramount Skydance is closing in on a settlement with California officials to resolve an antitrust lawsuit blocking its $111bn combination with Warner Bros Discovery, potentially clearing the path to the acquisition's closure.

Settlement talks between Paramount and a dozen Democratic states led by California attorney-general Rob Bonta are progressing rapidly, according to people familiar with the matter. A deal could come in weeks, though talks could still collapse. The tie-up has been effectively paused since July after the coalition of 12 attorneys-general and the Writers Guild of America sued, forcing Paramount to suspend closing until a judge rules. A trial is set for March.

Paramount faces mounting pressure, as beyond month's end it must pay $7mn daily, totalling $650mn quarterly, to WBD shareholders if the deal drags on. Paramount executives have publicly threatened to relocate headquarters out of California. Bonta has pushed for asset sales over behavioral remedies like Paramount's pledge to release 30 films annually in theatres.

The deal would hand Paramount chief executive David Ellison control of DC Comics, Harry Potter franchises, CNN, TBS, and HBO Max. It has received approval in nearly 70 jurisdictions including Mexico and the UK. The FCC approved the 49.5 per cent foreign ownership from Middle Eastern sovereign wealth funds. WBD shares jumped 8.2 per cent in after-hours trading following the settlement report.