California defended its decision to settle its lawsuit challenging Paramount’s proposed merger with Warner Bros. Discovery, arguing that cinema owners’ support for the deal and promised annual film quotas outweighed other objections. At a court hearing, the state rejected claims that Paramount’s threat to leave California drove the settlement, while warning that the states opposing the acquisition remain prepared to proceed to trial if the agreement is rejected.

The merger would create a huge entertainment company but saddle it with more than $80 billion in debt. Paramount expects the combined business to generate about $69 billion in revenue, $18 billion in core profit and more than $10 billion in free cash flow in 2026, while spending over $30 billion annually on content; analysts estimate it could reach 240 million streaming subscribers by 2030, but face around $6.4 billion in interest costs in 2027.