Paramount is negotiating with 12 states, led by California, to settle a lawsuit blocking its $111 billion acquisition of Warner Bros. Discovery. The merger would create a media giant controlling two movie studios, CBS News, CNN, HBO Max, and Paramount+.

Talks include protecting CNN's editorial independence and divesting cable channels like Comedy Central. Paramount faces a $7 million per day penalty starting Oct. 1 if the deal doesn't close. California Attorney General Rob Bonta declined to confirm talks. David Ellison, Paramount's CEO, warned the studio might leave California without a settlement, pressuring **Gov.

Gavin Newsom and Mayor Karen Bass to favor resolution. Negotiators also discussed mandating 30 films per year from the combined studios. Judge Araceli Martínez-Olguín of the U.S. District Court for the Northern District of California** set trial for March.

The case reflects Hollywood's anxiety over consolidation amid streaming disruption and cable decline. Paramount argues scale is needed to compete with Netflix.