By Jody Godoy
Sept 21 (Reuters) - Paramount Skydance has settled with California and 11 other states that sued to block its $110 billion acquisition of Warner Bros Discovery, a source familiar with the matter said on Monday, clearing one of the last hurdles to a deal that would reshape Hollywood.
The settlement includes the creation of independent editorial boards for CNN and CBS, the source said, a move aimed at safeguarding the independence of their news operations under the combined company.
It also
includes a $30 million penalty per film for any shortfall against Paramount's pledge to release 30 movies annually, the source said.
Paramount Skydance and Warner Bros Discovery did not immediately respond to Reuters requests for comment on the settlement.
The settlement would remove a major obstacle to closing one of the largest media mergers in history, letting Paramount move forward with a combination that will unite two of Hollywood's biggest film studios, two major streaming services and two of the largest cable-news operations under a single owner.
Reuters first reported on Friday that Paramount and the states could settle as soon as the weekend, with independent content monitoring of CNN and a commitment on the number of theatrical releases among the terms under discussion.
The Wall Street Journal reported on Sunday that the two sides had discussed a range of concessions, including a $1.5 billion investment in production in the state, a commitment not to sell either studio lot, and potential penalties if Paramount fails to honor a pledge to produce 30 movies a year after the merger.
Other measures under consideration include selling some cable channels and creating a board to help ensure CNN retains editorial independence, WSJ had reported.
While Trump administration regulators cleared the deal, a coalition of 12 state attorneys general, led by California's Rob Bonta, sued in July to block the merger, arguing it would reduce competition and create a media behemoth with the power to raise prices in movies and television.
A settlement will help Paramount avoid a $7 million daily fee it owes Warner Bros shareholders for each day the deal does not close past September 30.
Antitrust regulators in other jurisdictions globally, including the European Union and Britain, have already cleared the acquisition.
(Reporting by Jody Godoy and Deborah Sophia; Editing by Sriraj Kalluvila)
