Warner Bros. stock jumps 7% on Paramount settlement talks

Shares of Warner Bros. Discovery rose 7% on Monday, while Paramount Skydance stock climbed 5%. The market reacted to reports that Paramount has advanced settlement talks with California officials, who had sought to block the $111 billion acquisition on antitrust grounds.

Under the reported terms, the combined company would face financial penalties if it fails to release at least 30 films in theaters each year. Paramount would pay $30 million for each movie short of that target, according to two people familiar with the discussions cited by Bloomberg. The company could also be forced to sell its 49% stake in Miramax if it misses the film target.

Twelve Democratic state attorneys general, joined by the Writers Guild of America, sued to stop the transaction, arguing it would give Paramount excessive control over film and cable television. Discussions between Paramount and California Attorney General Rob Bonta accelerated in recent days, although no final agreement has been reached.

Warner Bros. shareholders approved Paramount's revised offer in April, valuing the deal at roughly $111 billion including debt, following a bidding battle against Netflix. The acquisition will expand the entertainment portfolio led by Paramount Chief Executive David Ellison.