California Attorney General Rob Bonta canceled planned settlement talks with Paramount over the state’s antitrust lawsuit challenging David Ellison’s proposed $111 billion acquisition of Warner Bros. Discovery, accusing the media company of acting in bad faith.
Collapsing Talks and Bad Faith Accusations
The two sides were scheduled to meet on Monday, August 24, for preliminary settlement discussions regarding the lawsuit filed last month by a coalition of 12 Democratic state attorneys general, led by California. The coalition is asking the court to block the merger, arguing it would give the combined company too much power across cable television and movie production. However, Bonta pulled out of the session late Sunday following a report by the Wall Street Journal detailing Friday’s prep session between lawyers for both sides.
“Not only did Paramount leak the alleged substance of settlement discussions, but they misrepresented these discussions, demonstrating a lack of good faith,” Bonta said in a statement. “As soon as Paramount stops playing games and engages sincerely, my office is happy to meet again.”
Paramount responded on Monday by denying responsibility for the leaks. “As we have assured the Attorney General’s office, Paramount has not been the source of the leaks of any of our confidential discussions with the AG’s office,” the company stated, adding that it remains ready to continue good-faith discussions.
Pressure Campaigns and Legal Timelines
Last week, Paramount indicated it would ask a court to order the opposing states to post a $1.9 billion bond. Meanwhile, industry groups including the Directors Guild of America, IATSE, and Cinema United, along with several California political leaders, have called for a resolution, arguing that the uncertainty caused by the delay is hurting the industry, with the Writers Guild filing a parallel lawsuit.
Bonta has thus far resisted that pressure. He previously stated that any resolution would require “robust structural remedies,” likely involving asset sales and divestitures, which Paramount may resist. Paramount CEO David Ellison is eager to reach a settlement before mounting financial penalties take effect. Under the merger agreement, Paramount must begin accruing a “ticking fee” owed to shareholders amounting to roughly $7 million per day starting October 1 if the deal has not closed.
Path Forward Ahead of the March Trial
An antitrust trial is scheduled for March, leaving a narrow window for negotiations. LightShed Partners analyst Rich Greenfield told CNN that the clock is working against Paramount, noting the October ticking fee, the March trial date, and the June merger agreement expiration. Greenfield asserted that resolving the case before trial requires offering structural remedies for both film production and linear television.
Despite the setback, Paramount has agreed to postpone closing on the deal until after the March antitrust trial. Bonta indicated that his office remains open to future talks if Paramount shifts its approach. “As I’ve said before, generally for all cases, I prefer to resolve disputes in the boardroom, not the courtroom,” Bonta said.
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