[DigitalToday reporter Jae-won Choi] Paramount has reached a settlement with 12 U.S. states that filed a lawsuit opposing its acquisition of Warner Bros Discovery (WBD). In exchange for guarantees on annual theatrical releases and U.S. film production investment, one major legal obstacle to the $110 billion merger has been removed.

On Sept. 21 (local time), IT media outlet The Verge reported that Paramount submitted a proposed settlement to a court to resolve an antitrust lawsuit with attorneys general from 12 states, including California. The parties have reached agreement, but final court approval of the consent decree is still pending.

A key condition is maintaining the number of films released in theaters over the next 5 years. The combined company must release at least 30 films a year for the first 2 years, then 32 films a year for the following 3 years. It must include at least 4 independent films each year. It also agreed to increase U.S. film production spending by at least $300 million a year over the companies' 2025 spending, for a total increase of at least $1.5 billion over 5 years.

Penalties will apply if the company fails to keep its promises. If the number of theatrical releases falls short, it must sell Miramax and pay $30 million per missing film. It will also create a $47.5 million support fund for workers who lose jobs due to the merger.

Conditions were also attached to the cable channel business. Paramount and WBD must negotiate their cable channel carriage contracts separately for 5 years after the merger. They agreed to maintain services such as the free streaming service Pluto TV and to set up a separate committee to safeguard the editorial independence of CNN and CBS.

The settlement came just before additional costs from deal delays were set to arise. Paramount would have had to pay WBD shareholders $0.25 per share each quarter if the merger was delayed from Oct. 1, with the daily burden estimated at about $7 million.

Paramount Chief Executive David Ellison (데이비드 엘리슨) said, "We have resolved the approval issues needed for the merger." California Attorney General Rob Bonta (롭 본타) drew a line, saying, "This settlement does not mean support for the merger itself."