Paramount Skydance has reached a settlement with 12 states that sued to block its $110bn takeover of Warner Bros Discovery, clearing the path for a deal expected to remake Hollywood. The states were led by California. Paramount agreed to concessions but will not have to divest major assets, including its cable channels.

The agreement creates an independent editorial board for CNN and CBS, which would be combined under Paramount chief executive David Ellison. It also requires Paramount to pay penalties if it does not distribute at least 30 films a year in theatres. Paramount agreed to keep its operations in California after threatening to move its headquarters out of the state.

Governor Gavin Newsom and Los Angeles mayor Karen Bass had supported a settlement to protect jobs. Paramount executives were racing to close the deal before October, when it would owe WBD shareholders $7mn a day, or $650mn a quarter, for delays. The settlement could be announced as early as September 21 2026.