Paramount, Warner Bros jump on report of settlement progress in merger fight

Investing.com -- Shares of Paramount Skydance Corp (NASDAQ:PSKY) and Warner Bros. Discovery climbed after the Wall Street Journal reported Sunday that Paramount and California's attorney general have made progress in settlement talks over the company's proposed $81 billion merger with Warner Bros.

Paramount executives and a coalition of states suing to block the deal spent the weekend negotiating the terms of a potential settlement, the Journal reported. An agreement would clear the path for a merger that would unite HBO, CBS, CNN, several streaming platforms and major film studios under a single company.

Among the concessions under discussion is a $1.5 billion commitment to film and television production in California, along with a pledge not to sell either studio's lot and to keep operations based in the state, the report said. Paramount had previously considered relocating out of California amid opposition to the deal.

Paramount shares jumped 6.3% in premarket trading by 04:20 ET (08:20 GMT), while Warner Bros surged 7%.

The parties have also discussed penalties tied to Paramount's earlier promise to produce 30 movies annually following the merger, including a potential requirement to divest its stake in Miramax, the studio behind films such as "Pulp Fiction," according to the report.

Other measures under consideration include the sale of certain cable channels and the formation of a board intended to safeguard CNN's editorial independence, the report said. CNN has emerged as a recurring point of political tension throughout Paramount CEO David Ellison's pursuit of Warner Bro, and the company had reportedly weighed establishing such a board even before the lawsuit was filed.

No final agreement has been reached, and the eventual terms remain uncertain, the report said.

Ellison has spent the past year working to acquire Warner Bros. in a deal that would significantly expand his media holdings, though the effort has faced pushback from political figures and members of the entertainment industry. In July, a dozen Democratic-led states, spearheaded by California Attorney General Rob Bonta, filed suit to block the merger on antitrust grounds, arguing it would excessively concentrate control over theatrical film and cable television markets.