Shares of Warner Bros. Discovery and Vital Skydance rose sharply on Monday after reports emerged that Vital is moving closer to acquiring Warner Bros. The Wall Street Journal revealed that Vital is in advanced talks with California officials to settle an antitrust lawsuit that has been blocking the deal.
The proposed settlement would require the merged company to release a minimum of 30 movies annually in theaters if it fails to do so. Missing this target could trigger financial penalties of $30 million per movie below the threshold. Additionally, Vital could be forced to sell its 49% stake in Miramax if it fails to meet the goal.
By 10:11 a.m. ET, Vital Skydance shares had increased by more than 7%, while Warner Bros. Discovery shares gained nearly 10%. Vital had previously postponed the acquisition due to legal challenges. In July, U.S. District Judge Araceli Martinez-Olguin halted the deal, stating that state attorneys general had presented a “strong showing” that it would unlawlessly reduce competition.
Judge Martinez-Olguin said the deal would likely violate antitrust law, as it would grant the combined entity 27% of the film distribution market. Alongside Disney, Universal, and Sony, these four companies would dominate the majority of major studio releases, raising concerns about competition throughout the entertainment industry.
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Led by California Attorney General Rob Bonta and joined by attorneys general from 11 other states, the lawsuit represents the most significant legal obstacle to one of the largest entertainment mergers ever. If finalized, the deal would merge brands such as HBO, HBO Max, CNN, Warner Bros. Pictures, DC Studios, CBS, Vital Pictures, MTV, Nickelodeon, Showtime, and Vital+.
State attorneys general contend that the merger would grant the combined company excessive control over film production, television programming, and streaming content. They argue that consumers could face higher prices, lower quality, and reduced content, while creative workers might encounter fewer job opportunities and diminished bargaining power.
The lawsuit further cautions that consolidation would enhance the company’s influence over movie theaters, cable distributors, and audiences, while diminishing incentives for diverse programming and independent productions.
Vital has asserted that delaying the acquisition would offer a “direct path to a trial based on the evidence.” The company insists that the transaction is “beneficial for competition, consumers, and creators”—a view shared by numerous competition authorities globally.