Paramount Gets Warner Bros. by Promising to Keep Making Movies

U.S. District Judge Araceli Martínez-Olguín cleared Paramount Skydance to buy Warner Bros. Discovery, with the companies saying the deal is expected to close on October 6. Warner holders are due a cash payout of $31.01666668 a share if that date holds.

The last wall was not the Justice Department. It was a California-led antitrust case. The judge entered a consent decree on September 30 that lets the buy close if the combined company behaves, for five years, like a theatrical studio with a production quota.

A Judge Trades a Breakup for a Production Quota

California Attorney General Rob Bonta and 11 other attorneys general sued on July 13 under Section 7 of the Clayton Act, in case 4:26-cv-07116-AMO in Oakland. They said a Paramount-Warner combination would cut film output, raise prices, and squeeze theater owners and cable buyers. The Justice Department and overseas regulators had already let the deal through. The states were the holdouts.

On September 21 they took a five-year court-enforceable settlement with 12 states instead of a trial. The plaintiff list is California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington. Martínez-Olguín called the decree a fair, reasonable, and good faith way to meet the harms alleged in the complaint. She also called it a compromise. She dissolved the order that had blocked a close.

This settlement is not a vote of support for this merger. But we believe this settlement, which resolves our antitrust concerns in every market alleged in our case, protects competition and consumer choice, and puts workers’ needs, concerns, and futures first, is the best course of action.

Rob Bonta, California attorney general, September 21, 2026 statement

Washington Attorney General Nick Brown put the federal gap in blunter terms, saying federal regulators ignored the effects on consumers and labor while the states extracted concessions. IATSE, the Directors Guild, the Teamsters, and SAG-AFTRA welcomed the bargain. The Block the Merger coalition, which had tried to stop the deal, called the paper toothless. The states had talked about breaking the company up. They left with a quota, a spending floor, and a monitor.

Thirty Films a Year, or Miramax Goes

If the merger closes in 2026, the commitment years run 2027 through 2031. In each of those years the combined company must hit a thirty-film theatrical release commitment that steps up after year two. A film, under the decree, is a feature of at least 75 minutes meant for U.S. theaters. Re-releases and commemorative editions do not count.

THE FIVE-YEAR THEATRICAL QUOTA

That is 156 theatrical titles over five years, including 103 wide releases. At least half of the counted films each year must be produced or jointly produced by the combined company. At least 20 percent must carry production and acquisition budgets of $50 million or more, in September 2026 dollars, and open on at least 3,000 domestic screens within the first four weekends. Limited runs under 600 screens do not count unless they expand to 1,000 screens within 30 days.

“Independent” is a wide door. The decree defines it as a film based on an original screenplay, or one that came from producers outside the combined company, Disney, Universal, or Sony. An in-house original can satisfy the independent slot. Theater chains still get a volume guarantee either way.

Miss the annual minimum and the meter starts. Each shortfall film costs $30 million, split 50/40/10: $15 million to union health and retirement trusts for the WGA, IATSE, DGA, Teamsters, and other production unions; $12 million to the Motion Picture & Television Fund; $3 million to a National Association of Attorneys General antitrust fund. The company gets six months to catch up. The $30 million is still due even if it does. Stay short after the cure window and it must sell its entire stake in Miramax within 12 months, to a buyer the state committee accepts, and it cannot buy that stake back during the commitment period.

The same decree adds a U.S. production floor of $300 million more each year than the two companies spent in the United States in 2025, or $1.5 billion extra across five years. Bonta said about 5 percent of Paramount’s production is in the United States now. If Congress passes an uncapped federal film tax credit of at least 20 percent, U.S. production days must rise to 20 percent of all film production in the first two remaining full years and 30 percent in the last three. Stack an uncapped California or New York credit of at least 43 percent on top, and the U.S. share must hit 40 percent.

The Lots Stay Put and the Windows Stay Closed

The decree also locks the physical plant. For the commitment period the company cannot sell or close the Paramount lot at 5555 Melrose Avenue in Los Angeles or the Warner Bros. lot at 4000 Warner Boulevard in Burbank, and it must use commercially reasonable efforts to run them as it has, including third-party leases and film and TV work. Any unfinished studio-development contracts already signed in a plaintiff state must be honored.

THE HANDCUFFS ON THE RELEASE CALENDAR

• Theatrical window: Each counted film must stay exclusive to theaters for at least 45 days.
• Marketing hold: The company cannot sell the title as arriving on PVOD, SVOD, or another stream before day 30 of that window.
• SVOD holdback: Counted films cannot hit Paramount+ or a successor for at least 90 days after the U.S. opening.
• Rental floor: For the first three commitment years, new-release terms to theaters cannot be worse than the better of Paramount’s or Warner’s existing schedule with that exhibitor.
• Catalog access: Both libraries stay licensable to theaters on 2025-like rental terms, with short blackouts around anniversary reissues.
• Cable talks: Paramount basic channels and Warner basic channels must be negotiated separately for five years. Break that wall and the company can be forced to sell BET, VH1, Comedy Central, Smithsonian, Destination America, and Science.
• Pluto TV: A free streaming service of that type must keep running at current service and quality.

There is also an Independent Film Fund, $5 million a year, $25 million over the term, and a community and workforce spend of $9.5 million a year, $47.5 million over five years, for training, film programs, and arts groups. Displaced staff get a right to apply for open jobs. Existing union contracts must be honored, and the company must bargain in good faith on successors.

David Ellison has talked for months about 30 movies a year. The decree turns that talking point into a court order with a price list. It also freezes a 45-day theatrical window at the moment Wall Street has spent years pushing studios toward same-week streaming. The “next-generation” company is being told to feed multiplexes first.

Who Funds the Combined Company

The merger agreement is dated February 27, 2026. It is an all-cash statutory merger. Each Warner Bros. Discovery share converts into $31.00 plus $0.00277778 for every calendar day after September 30 through the close date. Six days after September 30, counting October 6, is $0.01666668. That is how the companies arrived at $31.01666668. Bonta’s own July suit described the takeover as a $110 billion deal.

Larry Ellison, through his revocable trust, committed about $47 billion of non-voting Paramount Skydance Class B shares, per the FCC record. RedBird Capital is in the equity syndicate. On the debt side, Paramount on September 30 priced $41.4 billion and €885 million of senior secured notes and an $8.5 billion and €850 million Term Loan B.

Three Gulf sovereign funds are in for a combined $24 billion: Saudi Arabia’s Public Investment Fund at about $10 billion, the Qatar Investment Authority at $7 billion, and Abu Dhabi’s L’imad Holding at $7 billion. Paramount’s FCC petition said those three would hold 38.5% of post-deal equity, with no votes: PIF 15.1 percent, the UAE fund 12.8 percent, QIA 10.6 percent. All foreign holders together were projected at 49.5 percent. The Ellison family keeps voting control. The Media Bureau on September 17 granted non-voting Gulf equity above the 25% cap in DA-26-1001, on the condition that the foreign stakes stay non-voting Class B and that the family retains control of the broadcast licensees.

So the company that California just ordered to shoot more movies on Melrose and in Burbank will have Gulf funds as its largest non-voting owners and a five-year production quota written by Democratic attorneys general. The parent is also dropping the Paramount Skydance name. An October 2 filing says the company intends, on October 6, to become Skydance Corporation, move its Class B shares from Nasdaq to the NYSE, and trade as SKYD. A Paramount note to staff put it in a slogan: together, we are Skydance. The Paramount, Warner Bros., and HBO names are meant to stay on the work.

Ellison Splits the Job With Mattel’s Kreiz

Minutes after the judge signed, Ellison named Ynon Kreiz, who is leaving Mattel, as co-CEO of the combined company. Kreiz, 61, starts on October 5 and joins the board. He ran Mattel as CEO from April 2018. During that run, Mattel’s first theatrical Barbie became Warner Bros. Pictures’ highest-grossing film. He now helps run the studio that released it.

The division of labor is written down. Ellison stays chairman and CEO and, under the September 27 board action, the sole principal executive officer. He keeps strategy, creative direction, talent, partnerships, technology, and capital allocation. Kreiz, on a five-year employment letter, runs day-to-day operations and the integration. Business units report to both. Ellison said he wanted operating firepower for a job that size.

Bringing together Paramount and Warner Bros. Discovery to create a next-generation global media company is a transformational moment for our industry. Leading it takes a rare combination of strategic vision, operational depth and experience running a public company at the highest levels of media. Ynon brings all three.

David Ellison, chairman and CEO, Paramount Skydance, September 30, 2026 release

Kreiz said he wants premium content and iconic brands at scale across every entertainment vertical. The pairing is a film financier-producer and a toy-company operator whose last great trick was turning a doll line into a billion-dollar theatrical event. That is a brand-extraction model, sitting on top of a court order that requires 30-plus theatrical films a year.

Other chairs are already moving. Paramount+ chief Cindy Holland said she was stepping down. Casey Bloys, who runs HBO, is expected to take the combined streaming operation. Warner Bros. Discovery chief David Zaslav is expected to leave when the deal closes. Film-studio reporting lines are still being drawn. The co-CEO structure is the one piece Paramount has put on paper.

CNN and CBS Get a Board Their Owner Appoints

Within 180 days of closing, the combined company must set up a five-member News Editorial Independence Board for CBS News and CNN. Members must be established journalists, active or retired, with at least 10 years in the trade and three years of credentials. No more than two may share the same political party. No government official may sit on it or approve its members. No officer, director, shareholder, or non-journalist employee of the company may sit on it either.

The combined company’s own board appoints them. Terms are three years. Removal is only for good cause. The panel writes guiding principles from CBS and CNN standards in force when the decree was entered, hears disputes over alleged bias and fairness, and is supposed to watch editorial independence, including independence from owners and shareholders. It reports to the combined board through the chief compliance officer. Its reach is U.S. news and editorial content. Critics of the settlement have noted the obvious limit: the people who own the company pick the referees.

The Writers Guild of America, which had its own suit to block the merger, settled the same week as the states. The guild said it still believes the merger will damage writers, but that it could not carry a complex antitrust trial alone after the attorneys general stood down. Paramount agreed to a $17.5 million payment to the guild health fund, plus fees, and to bar writer layoffs at CBS News Broadcast for five years. The guild’s longer ask, a structural split between streamers and studios on the old financial-interest-and-syndication model, is not in the decree.

What the Five-Year Clock Binds

An internal compliance monitor must be named within 21 days of closing, reporting to the chief compliance officer. An outside monitoring trustee watches the rest. After the second full commitment year, the company may ask the court to ease the decree if it can show the rules impair its ability to compete. Until then the clock runs through December 31, 2031, if closing falls in 2026.

THE PATH TO AN OCTOBER 6 CLOSE

1. February 27, 2026: Paramount Skydance, Warner Bros. Discovery, and Prince Sub Inc. sign the merger agreement at $31.00 a share in cash.
2. July 13, 2026: Twelve states file the Oakland antitrust complaint and later obtain a no-close order.
3. September 17, 2026: The FCC Media Bureau grants Paramount’s foreign-ownership petition, DA-26-1001.
4. September 21, 2026: The states, Paramount, and Warner file the proposed consent decree. The WGA settles the same day.
5. September 30, 2026: Judge Martínez-Olguín enters the decree. The companies set an October 6 close. Ellison names Kreiz co-CEO.
6. October 5, 2026: Kreiz starts and joins the board.
7. October 6, 2026: Anticipated close, NYSE listing, ticker SKYD, and the planned name change to Skydance Corporation.

The close is still subject to customary conditions. If it happens, Hollywood gets a single owner for Paramount Pictures, Warner Bros., HBO, CNN, CBS, Nickelodeon, and the rest of the stack, financed with Ellison equity, Gulf non-voting stock, and a very large secured-debt pile. What the states extracted in return is not a spun-off studio. It is a five-year order to keep both lots open, pay extra to shoot in the United States, and put 30, then 32, movies onto 2,000-screen maps, with a $30 million invoice for every miss.

Skydance can call itself next-generation on the NYSE ticker. For five years the court file in Oakland will still read like a studio-era production slate.