By Josh Sisco | Bloomberg
California Attorney General Rob Bonta canceled a meeting to discuss a possible settlement with Paramount Skydance Corp. scheduled for Monday after details about the discussions leaked over the weekend.
“My office had a meeting with Paramount on Friday. Paramount did not maintain the confidentiality of that meeting,” Bonta said in a statement. “Not only did Paramount leak the alleged substance of settlement discussions, but they misrepresented these discussions, demonstrating a lack of good faith.”
Paramount has been trying to resolve antitrust concerns about its planned $110 billion acquisition of Warner Bros. Discovery brought by California and 11 other states. The US Justice Department and other major global jurisdictions have already approved the deal, which has the power to reshape Hollywood by combining two of the biggest producers and distributors of news and entertainment content.
The group of states opposed to the deal argue that the merger would hurt film and television distribution, and result in fewer jobs in the entertainment industry.
Bonta has said he is seeking structural remedies, which are likely to include a sale of some cable TV assets, a person familiar with the matter said. Together Paramount and Warner Bros. own more than two dozen cable channels including MTV, Comedy Central, Nickelodeon, CNN, TNT and HBO. A representative for Paramount declined to comment.
The Wall Street Journal reported over the weekend that Bonta was expected to ask Paramount to divest some of its cable assets in order to win approval. The paper said Bonta also wanted Warner Bros.’ movie studio to remain a separate operation with little interference from Ellison.
Pressure has mounted for Bonta and Paramount Chief Executive Officer David Ellison to reach an agreement. Recently both California Governor Gavin Newsom and Xavier Becerra, the frontrunner in this year’s race to succeed him, have weighed in to urge the two sides to come together.
Hanging over the legal battle is the risk that Ellison would yank the company out of California. The financial costs of any delay in closing the merger are significant for Ellison and Paramount. In order to clinch the deal, Paramount agreed to pay Warner Bros. shareholders a “ticking fee” that amounts to about $650 million a quarter starting Oct. 1 and continuing until the transaction closes. Paramount could face more than $1 billion in such fees if negotiations drag out until the scheduled trial in March.
Paramount’s board has approved a possible move to another state as early as Oct. 1, according to a person familiar with its plans. Ellison has told senior executives that the move would involve headquarters staff first but that he’s putting together a five-year plan that would shift most of the film and TV studio’s jobs to the new home.
With assistance from Hannah Miller at Bloomberg.