Warner Bros. Discovery Surges Over 7% Pre-Market as Paramount Reportedly Advances Antitrust Settlement Talks

TradingKey - In US pre-market trading on September 21, Warner Bros. Discovery (WBD) rose as much as about 7.2% at one point. According to a Wall Street Journal report citing people familiar with the matter, Paramount Skydance (PSKY) is in settlement talks with the California Attorney General and representatives from other states to resolve antitrust lawsuits blocking the merger deal.

[Source: TradingView]

Conditions under discussion include Paramount investing $1.5 billion in film and television production in California and retaining local production facilities and production operations. Paramount previously pledged to produce 30 films per year after the merger, and the negotiating parties are discussing corresponding oversight and breach-of-contract penalties.

Other potential terms include selling certain cable channels and establishing an independent committee to safeguard CNN's editorial independence. The parties have not yet reached an agreement on these terms.

Antitrust Lawsuits Remain Main Obstacle to M&A Closing

Under the merger agreement, Paramount will acquire Warner Bros. Discovery for $31 per share in cash, valuing the equity transaction at approximately $81 billion, with an enterprise value including debt of nearly $111 billion.

WBD shareholders have approved the transaction, though regulatory and judicial proceedings remain incomplete. Twelve states, including California, as well as the East and West branches of the Writers Guild of America, have filed separate antitrust lawsuits, with cases scheduled to go to trial in March 2027.

States remain divided over settlement terms. States such as New York are demanding the inclusion of stricter job protections and competition remedies.

In other regulatory matters, the U.S. Federal Communications Commission has approved the foreign ownership arrangements involved in the transaction. The foreign investors concerned will hold no voting rights, and control of the merged company will be held by the Ellison family and RedBird Capital.

Under the merger agreement, if the transaction is not completed by September 30, the acquisition consideration will increase daily starting October 1, equivalent to $0.25 per share for each full quarter, payable at transaction closing. Antitrust settlements and court proceedings will determine whether the transaction can be completed.