Global Market: Warner Bros, Paramount shares jump on merger settlement talks

Shares of Warner Bros Discovery and Paramount Skydance jumped on Monday after reports that Paramount and California's attorney general were in advanced settlement talks that could remove one of the final hurdles to their proposed merger, Reuters reported.

Warner Bros Discovery shares rose 7.1% in early trading, while Paramount Skydance gained 5.3%. If the gains held, the companies were set to add a combined $5.59 billion to their market valuations.

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Reuters reported that the talks could help clear a key regulatory obstacle to Paramount CEO David Ellison's plan to combine the two media companies in a deal valued at about $110 billion.

The Wall Street Journal reported that the two sides had discussed a range of potential concessions, including a $1.5 billion investment in film and television production in California and a commitment to retain both companies' studio lots. The discussions also included potential penalties if Paramount fails to meet a pledge to produce 30 movies a year following the merger.

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Other measures under consideration include the possible sale of some cable channels and the creation of a board aimed at helping safeguard CNN's editorial independence, according to the Wall Street Journal.

The antitrust case brought by California and 11 other states represents one of the final major obstacles to the proposed combination of two of Hollywood's biggest studios. The merger would bring together major film and television assets as Paramount seeks to strengthen its position against larger streaming and entertainment companies.

The settlement discussions have also gained urgency because of the financial costs associated with delaying the transaction. Paramount faces a $7 million daily fee payable to Warner Bros shareholders for each day the deal remains unfinished beyond September 30, according to Reuters.

Reuters subsequently reported that Paramount Skydance had reached a settlement with California and other states challenging the merger, potentially clearing a major legal hurdle for the transaction.

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