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California's Attorney General announced a settlement that solves a lawsuit filed against Paramount Skydance, potentially paving the way for its acquisition of Warner Bros. Discovery.

The office of California attorney general Rob Bonta announced on Monday a settlement reached with Paramount Skydance over its acquisition of Warner Bros. Discovery, a key step to close the deal.

The settlement determines that the company will face financial penalties if it doesn't release at least 30 movies in theaters for the first two years after the deal, and 32 over each of the following three years.

The fine would amount to $30 million per missed film and would be paid into health care and retirement funds related to Hollywood unions. Paramount also pledged to set up independent editorial boards to oversee CNN and CBS News.

David Ellison released a statement on Monday saying "We are grateful to Attorney General Bonta and his fellow AGs, as well as the WGA, for engaging in good faith to find a path forward to a resolution that serves all parties, and to Governor Newsom for his support throughout this process."

"Our goal has always been to build a stronger Hollywood — one with more stories told, greater choice for consumers and stronger competition," the document added.

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Paramount had delayed the acquisition over the legal challenge. U.S. District Judge Araceli Martinez-Olguin in Oakland had paused the acquisition in July, saying attorneys general made a "strong showing" that it would amount to an unlawful decrease in competition.

Martinez-Olguin said the deal would likely violate antitrust law, considering it would give the company 27% of the market for the distribution of films. Combined with Disney, Universal, and Sony, four companies would account for the overwhelming majority of major studio releases, raising concerns about competition throughout the entertainment industry.

If effectively completed, the deal would combine some of the world's most recognizable entertainment brands under one corporate umbrella, including HBO, HBO Max, CNN, Warner Bros. Pictures, DC Studios, CBS, Paramount Pictures, MTV, Nickelodeon, Showtime and Paramount+.

State attorneys general argued that such concentration would give the combined company outsized influence over the production and distribution of films, television programming, and streaming content.

The deal also determined that the companies "must conduct negotiations for Paramount basic cable channels independently from negotiations for Warner Bros. basic cable channels, preserving the existing competitive dynamic between the companies."

"The merged company will commit $47.5 million in a workforce fund over five years for training and career development for workers who are displaced by the merger," read a statement by New Jersey's attorney general Jennifer Davenport said.