Paramount completes $110bn takeover of Warner Bros Discovery

Paramount Skydance has officially completed its $110 billion acquisition of Warner Bros Discovery, uniting two of Hollywood's most historic film studios under a single company called Skydance Corporation.

The deal, led by Skydance founder David Ellison, ends months of regulatory uncertainty and a bidding war that originally involved Netflix. Ellison will serve as chairman and chief executive of the merged company. The newly formed entertainment giant now controls some of the world's most famous brands, including HBO, CBS, CNN, Nickelodeon, Showtime, Comedy Central, DC Studios, and the Food Network, as well as lucrative franchises like Harry Potter, Game of Thrones, and Mission: Impossible.

While most official announcements valued the transaction at $110 billion, the Financial Times reported the figure at $111 billion, noting that the combined company's debt load has quickly become a primary focus for investors.

Why did US states sue to block the takeover?

The deal faced immediate resistance from regulators. A group of about a dozen US states, led by California, filed lawsuits to block the merger. They argued that bringing two of the largest studios in Los Angeles together would stifle market competition, drive up prices for cable subscribers and streaming consumers, and cause "substantial" economic harm to cinemas and distributors nationwide.

To clear the way for the merger, Paramount and Ellison agreed to a settlement last month, which introduced unprecedented regulatory conditions on how the new studio must run its business.

What are the conditions of the settlement?

To satisfy state attorneys general, Skydance Corporation must meet strict annual film production quotas designed to protect jobs and guarantee business for movie theatres.

Under the terms of the agreement, the studio is required to release at least 30 films every year. If Skydance fails to meet this quota, it will be forced to sell its 49 per cent stake in Miramax, the film company originally founded by Harvey and Bob Weinstein.

To prevent the studio from fulfilling its quota with cheap, automated content, the settlement includes strict guardrails banning "AI-generated" movies from being counted toward the 30-film minimum. The deal also dictates where films must be made. Skydance must ensure that at least 20 per cent of its film production takes place in the United States during the first two years of the merger, a figure that rises to more than 30 per cent over the following three years.

California Attorney General Rob Bonta, who led the legal challenge, said the terms are designed to ensure the studio produces "real, robust movies" that will stimulate the economy and put cinema workers back to work.

How will the merger affect CNN and CBS news?

The merger has also triggered concerns over the political and editorial independence of the company’s news networks, CBS and CNN. These concerns intensified after Ellison hosted a dinner for Donald Trump earlier this year.

As part of the antitrust settlement, Paramount has agreed to establish a "news editorial independence board" to guarantee "independent, objective, fact-based reporting" at both broadcasters.

The deal brings together two studios with drastically different recent fortunes. Warner Bros, which is 103 years old, has won more than 100 Academy Awards, dominating the most recent ceremony with 11 Oscars for films including One Battle After Another, Sinners, and Weapons. Paramount, founded in 1912, also has over 100 Oscars to its name, including classics like The Godfather and Titanic, but was shut out of the nominations entirely last year. Its last Academy Award was in 2022 for Top Gun: Maverick.