A major obstacle to Paramount's Warner Bros. merger has just been removed | CBC News

Twelve states and Hollywood writers challenging Paramount's buyout of Warner Bros. Discovery agreed to settle their lawsuits on Monday, effectively paving the way for the $81 billion US megamerger to cross the finish line, with some new commitments.

The blockbuster deal will still bring together two of Hollywood's oldest studios, key TV networks like CBS and CNN and streaming platforms HBO Max and Paramount+, as well as decades of libraries with titles ranging from Harry Potter to Top Gun.

Among the terms of Monday's agreement, announced by California Attorney General Rob Bonta — who led the states' case — Paramount pledged to increase domestic production by spending at least an additional $1.5 billion US on U.S. film production over the next five years and to establish monitoring of editorial independence of the company's news operations.

The settlement still needs a final sign-off by a judge. Bonta said Monday's agreement was about "protecting people's careers, the lives they've built here in California, the livelihoods their families rely on" — but he maintained it was not a vote in support of the merger.

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"I don't think these two companies should merge, but that's not something that we are focused on with our resolution here," Bonta said at a Monday press conference.

Paramount CEO David Ellison welcomed the settlement, which he said marked "complete clearance for this merger."

He added that "bringing Paramount and Warner Bros. Discovery together will build that stronger Hollywood, creating expanded opportunity for our people and even more great entertainment for audiences around the world."

The coalition of states — including entertainment heavyweights like California and New York — sued to block the merger in July, alleging a Paramount-Warner combo would "extinguish competition" and lead to fewer choices for consumers, particularly movie theatregoers and cable customers across the U.S.

The Writers Guild of America also filed suit, and both challenges were headed toward a full antitrust trial set to kick off in March. The WGA separately confirmed Monday that it settled its case as well.

"We continue to believe the merger will cause damage to writers and the industry at large," the guild said in a statement. "Now that the Attorneys General have settled with Paramount, however, as a nonprofit, the WGA must contend with the reality of forging ahead alone, with no backing from government enforcers, with a complex antitrust lawsuit that would cost millions of dollars to pursue through trial."