California’s attorney general called off planned settlement discussions with Paramount Skydance over its proposed $110 billion acquisition of Warner Bros. Discovery, escalating a state-led antitrust challenge that has emerged as a major obstacle to one of the media industry’s largest pending combinations.
Attorney General Rob Bonta canceled a meeting with Paramount representatives that had been scheduled for Monday after accusing the company of acting in bad faith during the early stages of negotiations, according to Reuters. His office said Paramount disclosed details from a Friday meeting and gave an inaccurate account of those discussions.
Bonta said his office would be willing to resume discussions if Paramount engages sincerely, according to Reuters. Paramount did not respond to the publication’s request for comment. The breakdown adds uncertainty to efforts to resolve a lawsuit brought by California and 11 other states seeking to stop the transaction.
The dispute puts competition concerns surrounding Hollywood consolidation back at the center of the deal. California and the other states sued in July, arguing that combining Paramount and Warner Bros. Discovery would weaken competition in film distribution and cable television, according to Reuters. The states contend that the transaction could hurt movie theaters and pay-TV distributors, increase costs for consumers and reduce competition for workers’ labor.
The proposed acquisition has otherwise cleared significant regulatory hurdles. Chinese authorities approved the transaction in June, following clearance from the US Justice Department and regulators in countries including Australia, Germany, France and Saudi Arabia, Reuters reported at the time.
California’s lawsuit, however, leaves Paramount confronting a potentially lengthy US court fight. Paramount has asked a federal judge to require the 12 states challenging the merger to post a $1.88 billion bond, citing financial costs associated with delays to the transaction, according to Reuters. The company faces so-called ticking fees of $7 million a day if the acquisition remains unfinished beyond a Sept. 30 deadline.
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The contours of a possible settlement had begun to emerge before Monday’s talks were scrapped. The Wall Street Journal reported that Bonta was expected to seek divestitures of some cable channels and a commitment to preserve separation between Paramount’s movie studio and Warner Bros. as potential conditions for resolving California’s objections, according to Reuters.
Related: Paramount, California to Meet Monday on Antitrust Settlement
Those potential remedies would address concerns that the combined company could wield greater power across both film and television markets. Paramount has argued that the transaction would support greater movie production and has pledged to release 30 films annually, Reuters reported, though opponents have questioned whether such a commitment would provide sufficient protection against the competitive effects alleged by the states.
The deal is central to Paramount Chief Executive Officer David Ellison’s effort to build a media group capable of competing more aggressively with Netflix and Disney. Reuters reported in March that the combination would carry about $79 billion of net debt and would bring streaming services including Paramount+ and HBO Max under one corporate owner.
Theater owners have also become an important constituency in the antitrust battle. Cinema United, which represents about 30,000 US movie screens, recently urged California and Paramount to reach a settlement with enforceable protections for exhibitors and consumers, according to Reuters. The trade group had previously opposed the merger.
Any path toward such a compromise now appears less immediate. The discussions were preliminary and there was no guarantee they would produce substantive settlement negotiations even before Bonta canceled Monday’s meeting, Reuters reported, citing an earlier New York Times account.
For Paramount, the rupture leaves the state lawsuit as a critical unresolved antitrust risk as financial penalties tied to delays accumulate. For California, the confrontation underscores its effort to extract stronger competition safeguards — or prevent the merger altogether — despite approvals the companies have secured elsewhere.
Source: Reuters
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