Paramount clears the last major hurdle to buying Warner Bros. Discovery by settling the lawsuit brought by 12 states

David Ellison's Paramount Skydance has cleared the last major hurdle to closing its $110 billion merger with Warner Bros. Discovery.

Paramount has settled the lawsuit brought by 12 states, California's Attorney General Rob Bonta announced on Monday.

A key part of the settlement: Bonta said Paramount agreed to release 30 movies in theaters each of the next two years, followed by 32 movies in each of the next three. A certain percentage of those films must be made in the US, and at least 20% have to be "blockbusters," Bonta said, though he didn't specify a budget threshold.

Paramount has agreed to increase its production spending in the US by at least $300 million a year for the next five years, Bonta said. He added that Paramount had pledged not to sell either its movie lot or the Warner Bros. lot.

Bonta said that Paramount had also agreed to establish a board to support CBS News and CNN's continued editorial independence and ensure objective, fact-based reporting.

"I want to be clear about something right up front: This settlement is not a vote of support for this merger," said Bonta, who led the legal fight against the Paramount-WBD deal.

Paramount also settled a separate lawsuit brought by the Writers Guild of America, the WGA said Monday.

Buying WBD will create the Hollywood behemoth that Ellison, Paramount's CEO, believes will have the size and strength to compete with giants like Netflix and Disney.

Ellison's Paramount will soon control the Warner Bros. studio, HBO, HBO Max, and TV networks CNN, TBS, and HGTV. The 114-year-old media company already owns the Paramount Pictures studio, CBS, streaming services Paramount+ and Pluto TV, and cable networks like Comedy Central.

In February, Paramount agreed to buy WBD for $31 per share. The agreement followed a monthslong bidding war with Netflix, which had planned to buy WBD's studio and streaming assets for $27.75 per share.

Paramount was pushing to close the WBD deal by the end of September to avoid paying WBD shareholders a so-called "ticking fee" of about $7 million per day, or $650 million per quarter, which it would have owed starting on October 1 if its deal wasn't finalized.

Ellison's company suffered a setback in July when 12 US states and the Writers Guild of America sued to block the acquisition, arguing that the merger would give Paramount too much power over the distribution of theatrical movies, big-budget films, and basic cable channels.