Paramount, California to Meet Monday on Antitrust Settlement

Representatives of Paramount and the office of California Attorney General Rob Bonta are expected to meet Monday to explore a settlement, according to two people familiar with the situation cited by Variety. The transaction remains on hold ahead of a federal trial scheduled for March in Oakland.

The discussions could determine whether Paramount can address state concerns through concessions rather than face months of litigation. Bonta has indicated that he is willing to negotiate but has said a resolution would require meaningful changes to the transaction, according to Variety. Paramount has yet to offer structural remedies sufficient to address the states’ objections, Bonta has said.

California is leading a coalition of 12 states that sued in July to stop the combination. The states contend that bringing Paramount and Warner Bros. Discovery together would improperly reduce competition in theatrical movie distribution and basic cable programming. The transaction would unite two of Hollywood’s five traditional major studios and two of the three largest cable programmers, according to Variety.

The dispute highlights a central issue in modern merger enforcement: whether commitments about a company’s future conduct can adequately protect competition or whether regulators should demand divestitures or other changes to the structure of a transaction.

Paramount has proposed commitments aimed at addressing concerns surrounding movie theaters. According to Variety, the company has pledged to release 30 films annually for three years and give those movies theatrical runs of at least 45 days before making them available elsewhere. Bonta’s office has questioned whether such behavioral commitments can be effectively enforced over time.

That distinction may prove critical in the negotiations. Structural remedies typically involve permanent changes to a deal, such as selling assets or businesses, while behavioral remedies generally place restrictions or obligations on how a merged company operates.

The parties are also facing pressure from the court to explore a negotiated resolution. At a hearing last week, U.S. District Judge Araceli Martinez-Olguin directed them to identify two potential magistrate judges who could oversee mediation, according to Variety. Federal procedures require the sides to make an effort to settle the dispute.

Related: California AG Seeks Structural Fixes in Paramount-Warner Antitrust Fight

Support for negotiations has meanwhile broadened within California’s entertainment industry. The Directors Guild of America, the International Alliance of Theatrical Stage Employees, Los Angeles Mayor Karen Bass and theater-industry group Cinema United have all urged movement toward a settlement, Variety reported.

California Gov. Gavin Newsom also pointed Friday to growing interest in resolving the dispute outside court, saying the process of determining whether an acceptable agreement can be reached was actively underway, according to Variety.

Any agreement may have to address another legal challenge. The Writers Guild of America has separately sued over the transaction, and its case is scheduled to be tried alongside the states’ lawsuit in March. The guild is also a party to the agreement preventing the merger from closing while the litigation proceeds, meaning it would need to participate if the parties seek a comprehensive settlement, according to Variety.

The stakes extend beyond the immediate transaction. A settlement requiring asset sales or other structural changes could offer another test of how aggressively state antitrust officials can shape major media combinations even when companies argue that greater scale is necessary to compete in an industry increasingly dominated by large streaming and technology platforms.

For Paramount and Warner Bros. Discovery, Monday’s talks provide an opportunity to determine whether that regulatory gap can be bridged. Without an agreement, the companies remain headed toward a March courtroom battle over whether their $111 billion combination can proceed.

Source: Variety