Paramount settles lawsuit with US states, clearing way for $110bn merger with Warner Bros

Image source, Getty ImagesImage caption, A coalition of states led by California had challenged the deal, raising concerns over competition across film and television.

Paramount Skydance has settled a lawsuit with a dozen US states, paving the way for its $110bn (£82.8bn) merger with Warner Bros Discovery.

Under the agreement, Paramount must produce at least 30 films a year and ensure a certain percentage are produced in the US, or face penalties including selling off parts of its business.

The deal clears one of the final hurdles for the merger that is set to reshape Hollywood, combining legacy studios, major streamers, and national networks under one umbrella.

Announcing the settlement, California Attorney General Rob Bonta said the agreement was "not a vote of support for this merger", while Paramount's chief executive welcomed the resolution.

David Ellison said that now the state attorneys general and the Writers Guild of America (WGA) concerns had been addressed, "we have complete clearance for this merger and look forward to putting these commitments into action".

"Our shared aim was an outcome that best serves consumers, workers and - most importantly -the creative community so vital to the art of visual storytelling," he said.

The WGA said it continues to believe the deal "will cause damage to writers and the industry at large".

The guild said it was forced to settle its own lawsuit because, as a non-profit, it could not afford to fight the merger alone without government support.

The studio is set to pay $17.5m into the WGA health fund, cover legal fees, and prohibit writer layoffs at CBS News Broadcast for five years.

Bonta said the settlement will help boost film production in the US. Under the agreement, Paramount must release at least 30 films each year.

To prevent the studio from fulfilling its annual quota with low-budget or automated content, Bonta said there were strict guardrails against "AI-generated" films.