Paramount Settles: What Did Ellison Actually Give Up

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We have a deal! Of some sort, anyway. The 12 state attorneys general, led by California Attorney General Rob Bonta, have settled their antitrust lawsuit against Paramount Skydance over its planned $111 billion acquisition of Warner Bros. Discovery.

The WGA also settled its suit against the merger over the weekend. To refresh, the states’ case centered on two main areas where a combined company would have too much marketplace leverage:

• Theatrical Movies, where Paramount-Warner Bros. would control a large share of movies going to theaters, and potentially give the new company unfair leverage over exhibitors in dictating new business terms that could raise ticket prices for Americans.
• Cable TV Networks, where WARNAMOUNT would control 50-plus networks alongside the most popular broadcast TV network, CBS — giving the company outsized leverage with TV bundle providers, which could ultimately result in bigger cable TV bills for Americans.

As for the deal’s specifics on each matter, we’re still awaiting some of the fine print, but key provisions include:

• No cable TV networks are to be sold, which was arguably the toughest issue for Paramount in the lawsuit, since the company needs every dollar of profitability from those networks to finance the huge debt involved in this deal. Selling a tranche of them would have significantly dented that profit. 
• CNN and CBS News will get some sort of independent editorial board consisting solely of journalists, mainly addressing the reported news-bias concerns from four of the 12 states (Massachusetts, New York, Connecticut and Minnesota), although note that the AGs antitrust suit didn’t specifically identify the editorial direction of CNN as an issue.
• PAR has agreed to pay some sort of financial penalty if WARNAMOUNT doesn’t put 30 movies in theaters each year, and an additional penalty could require the company to divest its 49 percent stake in Miramax. More details to come.
  • Keep in mind that Paramount is counting its international distribution of Focker-In-Law as part of its “15 movies a year in 2026” promise. This does not benefit U.S. movie theater owners (or, for that matter, U.S. moviegoers).
• A promise to remain in California and not sell off either the Warner Bros. or Paramount production lots, as well as a potential $1.5 billion investment in production in California, were also ideas under consideration according to the Wall Street Journal, but no word yet on whether they’ll be included in the final deal.

But this agreement will put the final remaining hurdle to the deal closing to rest. As such, WBD stock is now almost +11 percent today to $30.80, very close to the $31 a share that PSKY has agreed to pay for the company.

The agreement also avoids the dreaded ticking fee, set to begin in October, and the $1.9 billion bond request PSKY made of the state AGs.

As for what’s ahead, the studios already have plans to release 15 movies apiece in 2027, so not much changes there. But elsewhere, look for:

• $6 billion+ in “efficiencies”
• Thousands of Warnamount employee jobs lost 
• The creation of a fourth “super streamer” for consumers, combining PAR+, HBO MAX, Discovery+ and Pluto in some fashion under one roof to more significantly take on the top three SVOD services of Netflix, Amazon Prime Video and Disney+/Hulu.
• It also adds greater scrutiny to Peacock’s plans for the future once NBCU is spun out from Comcast next year.

Keep in mind that with all the talk of theatrical movies and streaming at Warnamount — it will be a business yet again heavily mired in the declining linear TV business, something that WBD just spent four years trying to get out of. So close.

Based on the Q2 2026 earnings reports from WBD and PSKY, Warnamount’s Q2 2026 revenues would have been $15.6 billion, down 6 percent YoY, though WBD’s loss of NBA rights is a unique mitigating factor this quarter. 

However, nearly half (46 percent) of Warnamount’s revenue would have come from linear TV (CBS and cable TV networks), a revenue line that was — 14 percent YoY — again with the caveat of NBA revenue disappearing this Q2. But still not a number that we will likely see with a “+” in front of it for a long, long time — if ever — and this is almost half of the company.

Warnamount’s aforementioned top two competitors, Netflix and Amazon, are not in this business at all.

Its other two main competitors, NBCU and Disney, have largely excised themselves from the cable TV business, with the exception of ESPN, which is still holding the line on revenue despite cord-cutting, and their respective broadcast TV networks are mitigating the linear TV revenue declines far better than the cable TV business . . . in which Warnamount will be the largest player, by far.

Just a final note on how Warnamount will primarily finance its global ambitions — almost 85 percent of Warnamount’s $3 billion in adjusted EBITDA (i.e., operating profitability) would have come from linear television in Q2 2026.