Paramount Skydance has reached a settlement with California and 11 other states that sued two months ago to block its $110 billion merger with Warner Bros. Discovery, clearing the way for a consolidation of two major Hollywood studios.

California Attorney General Rob Bonta announced the agreement at a news conference in Los Angeles, saying it would support local employment and domestic film production. The settlement, enforceable for up to five years, does not fully meet the states’ original demand to stop the merger, which they had described as unlawful. "I don’t think these two companies should merge," Bonta said, "but that’s not something we are focused on with our resolution here."

Under the terms, Paramount will increase annual U.S. production spending by at least $300 million and release a minimum of 30 films each year for the next two years, rising to 32 films annually for the following three years. The company will also create a board of journalists to oversee editorial independence at CNN and CBS.

The merger would combine Paramount and Warner Bros. studios, the television networks CNN and CBS, and the streaming platforms HBO Max and Paramount+. Paramount chief executive David Ellison, son of Oracle co‑founder Larry Ellison and a known supporter of former President Donald Trump, would lead the combined entity. Warner Bros. had initially agreed to sell most of its assets to Netflix, but Paramount Skydance’s hostile bid forced Netflix to withdraw. The Justice Department cleared the deal in June, but a federal judge later paused it after a lawsuit from 12 Democratic state attorneys general, led by California, raised antitrust concerns.

Connecticut Attorney General William Tong said he had sought a full divestiture of CNN and CBS to protect independent journalism. "We wanted to save ethical and independent journalism and news," he wrote. "I am deeply disappointed that we could not do more."

Bonta noted that all 12 states had signed onto the settlement. As part of the agreement, Paramount and Warner Bros. must continue negotiating cable packages separately for five years, effectively maintaining them as distinct offerings post‑merger. The company will also contribute $5 million annually to a fund for independent film acquisition and $9.5 million each year to workforce training and community organizations. Additionally, Paramount must produce at least four independent films per year to diversify storytelling perspectives.

The settlement ties future U.S. production share to the passage of a federal film tax credit of at least 20 percent. If such a credit is enacted, Paramount would be required to raise its domestic production share from the current 5 percent to 20 percent, and up to 40 percent if combined with an uncapped state tax credit. Both California and New York already offer limited state‑level film incentives.

Bonta emphasized the deal’s benefits for job creation in Hollywood, citing conversations with industry workers who would be affected. Governor Gavin Newsom praised the settlement as a way to avoid prolonged litigation and protect thousands of California jobs. Ellison, in a statement, thanked the attorneys general, the Writers Guild of America and Governor Newsom for their cooperation.

The settlement also includes provisions that prevent Paramount from closing or selling the Paramount and Warner Bros. film production lots in Los Angeles County, addressing earlier speculation about a potential relocation. The Writers Guild of America has agreed to drop its separate lawsuit, securing a five‑year ban on layoffs at CBS News Broadcast and a $17.5 million contribution to a health‑care fund.

While some officials expressed disappointment, Bonta argued that the agreement resolves the antitrust concerns identified in the original complaint and provides a pragmatic path forward, despite the inherent risks of litigation.

Oil prices edged higher on Tuesday, marking the first gain after five consecutive declines, as investors monitored preparations for potential US‑Iran discussions at the United Nations General Assembly.

Brent crude futures for November settlement rose $1.14, or 1.1%, to $101.48 per barrel at 0317 GMT. The more actively traded November contract climbed $0.85, or 0.9%, to $93.22 per barrel. The front‑month WTI contract, which was set to expire that day, increased 87 cents, or 0.9%, to $96.65 per barrel.

The move follows heightened diplomatic activity after Iran and the United States exchanged threats over the weekend. US President Donald Trump indicated he would be open to a meeting with Iranian President Masoud Pezeshkian, who was expected to attend the UN gathering in New York.

Tim Waterer, chief market analyst at KCM Trade, described the price rise as a short‑covering bounce rather than a fundamental shift. "Traders who had positioned for further declines are reducing exposure while the diplomatic narrative unfolds," he said.

Iran conveyed its conditions for resuming negotiations to mediators, according to Al Jazeera, which cited Iran’s security chief Mohsen Rezaei. Waterer noted that oil prices are likely to stay within a narrow range and remain sensitive to any headline related to US‑Iran diplomacy.

Regional tensions remained elevated after Yemen’s Iran‑aligned Houthi movement claimed attacks on Riyadh and a Saudi Aramco facility in Yanbu, targeting Saudi‑backed forces along the Red Sea coast. Three Iranian sources told Reuters that China had privately urged Tehran to curb Houthi operations after Saudi Arabia appealed to Beijing.

Saudi Aramco increased crude exports through the Strait of Hormuz following disruptions to its East‑West pipeline that forced a temporary halt of shipments via Yanbu. Tanker tracking data showed approximately 14 million barrels of Saudi crude loaded onto seven supertankers within the Gulf on Sunday.

Supply concerns have eased as shipments through the Strait of Hormuz reached a six‑month high, helping to stabilize the market. Crude implied volatility slipped 3.3% to 50.39, though it remains historically elevated, according to Saxo Bank analysts.

Separately, an armed group shut valve seven on Libya’s Sharara crude pipeline to Zawiya port on Monday, reducing production at the Sharara field. The National Oil Corporation reported a decline of roughly 200,000 barrels per day, with output now hovering between 100,000 and 105,000 barrels per day, as confirmed by two field engineers speaking to Reuters.

Federal Reserve officials continue to signal that additional interest rate increases may be necessary to bring inflation under control. St. Louis Fed President Alberto Musalem told Reuters that persistent demand alongside a broader commodity price shock — extending beyond oil — has kept inflation risks elevated. He argued that delaying action could force the central bank to implement larger, more abrupt tightening measures later.

Musalem noted that both demand-driven and supply-driven forces are contributing to inflation remaining above the Fed’s 2% target. He emphasized that underlying price pressures, even after excluding energy and other volatile components, have risen slightly and are moving in the wrong direction. Recent data shows the Personal Consumption Expenditures Price Index increased 3.7% year-over-year in July, up from a low of 2.3% in April 2025.

The official cited several factors behind the trend, including import price shocks linked to geopolitical developments and policy decisions. Rising fuel costs, driven in part by global supply disruptions tied to the US-Israeli conflict involving Iran, have pushed diesel prices to record highs. Additionally, demand for commodities such as copper has climbed amid expanding artificial intelligence investments.

Despite these inflationary pressures, Musalem highlighted that domestic spending and economic growth have remained resilient. He described this as a positive development from one perspective but a challenge for monetary policy, as strong consumer and business activity sustains price pressures.

The St. Louis Fed president, who does not currently hold a voting seat on the Federal Open Market Committee, declined to specify the extent or timing of potential future hikes. However, he argued that incremental and timely rate adjustments are preferable to waiting for conditions to deteriorate. "Earlier and incremental policy firming is better and less disruptive than later and larger and potentially more abrupt policy action," he said.

Labor market conditions were not seen as a primary inflation driver. Musalem described the current job market as stable and near full employment, stating that cooling it significantly would not be necessary to achieve inflation goals. Instead, he expressed hope that businesses would moderate price increases, particularly as they face higher input costs for fuel, raw materials, transportation, insurance, and skilled labor.

Market expectations currently point to three additional quarter-point rate hikes before April, with a roughly even chance of a move in October. The most recent Fed projections show a split view on whether another hike will be needed in 2027, reflecting uncertainty about the path forward. While acknowledging the risk of tighter policy, Musalem did not anticipate it would inevitably trigger higher unemployment or a recession.