Paramount has reached a settlement with 12 U.S. states, clearing the way for its proposed $81bn merger with Warner Bros Discovery (WBD). The coalition of states, led by California, had sued over concerns that combining two of Hollywood's last legacy studios would extinguish competition and reduce movie offerings across theaters and streaming platforms. Four holdout states — Massachusetts, New York, Connecticut, and Minnesota — agreed to the deal over the weekend. Paramount reportedly agreed to maintain independent editorial boards at CBS and CNN and to face a $30m penalty if the merged company fails to distribute 30 films annually. In exchange, Paramount will not be required to sell its cable channels, including CBS, MTV, Nickelodeon, and Showtime.

The legal battle had pressured Paramount executives, as delays beyond September 30 would have increased the purchase price. Reports earlier this year suggested WBD and Paramount might sell their California studio lots, a move that would have severely impacted Los Angeles's entertainment industry. David Ellison, whose Skydance Media acquired Paramount in an $8.4bn deal last year, called the lawsuit the "final obstacle" to the merger.

Twelve states had warned the merger could lead to fewer entertainment options and higher consumer prices. California Attorney General Rob Bonta expressed concerns about CNN's journalism under new ownership. Following the merger, Ellison appointed Bari Weiss as editor-in-chief of CBS News amid ongoing bias allegations. In a recent New York Times essay, Ellison emphasized his commitment to journalistic independence, stating newsrooms must reflect the whole world and not bend to any single party or cause.