California Attorney General Rob Bonta has canceled settlement talks with Paramount that were to begin this week about this studio’s $111 billion deal for acquisition of Warner Bros. Discovery. On Monday, Bonta was supposed to meet with the studio’s attorney in an effort to look for areas of compromise in a lawsuit deemed one of the last hurdles in a years-long media deal. Yet, due to the leaking and mischaracterization of a prior conversation, he said the studio had been uncooperative.
Bonta’s office had previously sat down with representatives from Paramount on Friday for an initial round of the talks. As of late Sunday he revealed that the Monday meeting had been called off. In a statement he said not only had Paramount leaked the details of the talks but lied about them.
“As soon as Paramount stops playing games and sits in good faith, my office is ready to sit down again.” The attorney general has been quoted as saying he would rather avoid litigation, so long as they come to the table with sincerity. Paramount has also refuted the leaks, with a company spokesman claiming the business understood Bonta’s reaction to the inaccurate coverage of the deal and that the company had not discussed sensitive conversations with the attorney general’s office. The very public debate highlights how delicate the initial talks had already become. California is leading a group of 12 states that sued back in July to stop the deal. The states claim a combined Paramount and Warner Bros.
Discovery would be too dominant of a new media player dominating in film distribution, streaming and cable television, raising prices for theater owners and pay-TV distributors, limiting the competition and damaging stakeholders. Paramount has responded that the lawsuit is misleading and exaggerated and has put significant effort into driving a settlement to allow the deal to go through. Both sides have a lot to gain or lose.
For its part, Paramount is faced with increasing costs and fees, should the litigation proceed to a trial set for March. On top of that, it has already agreed to postpone the consummation of the merger as long as June 2027 in the event that the respective antitrust fights are not yet settled. Rumours before suggested that California might require the spin off of some cable channels and the pledge that the Paramount movie studio would be separated from the Warner Bros.
operation in order for the merger to be approved. These ideas but never went beyond a private discussion which was only made public later on. The abrupt cancellation comes on the heels of a period of intense jockeying. Paramount had taken a hard position against California earlier by threatening to decamp, and Governor Newsom had made a point of wanting to ‘resolve this case, not continue a fight.’ Because of this, the limited time that a conversation might occur held symbolic importance. Its sudden conclusion shifts the parties toward a more adversarial stance at a time when the media industry in general is already adjusting to accelerated technological change and changing consumer preferences.