Paramount merger settlement delayed by four US states

Paramount’s attempts to settle the antitrust action brought by California attorney general Rob Bonta are being delayed by a handful of states that supported the lawsuit, according to reports.

News broke on Friday in The Wall Street Journal that Bonta was in talks to settle the suit and find a path forward in David Ellison’s proposed $111bn merger with Warner Bros Discovery (WBD).

However, CNN was among those to report over the weekend that New York’s Letitia James was among attorney generals pushing back against a deal as she looks for additional worker protections.

Connecticut and two other states were also declining to support the settlement, details of which have not yet emerged.

One possible compromise reportedly under discussion was that Paramount chief exec Ellison would agree not to combine the two studios and initially operate them as separate entities.

However that appears to contradict previous comments by Bonta, who is the lead in the antitrust case being brought by 12 US state attorneys general (Writers Guild Of America is also suing).

Bonta has said he is looking for a structural remedy decreed by a court, which usually addresses corporate architecture and could cover something like a divestiture of cable channels.

Running two companies as if separate entities while under the same ownership would be a behavioural remedy. Another would be Ellison’s pledge that, were the merger to close, Paramount and Warner Bros would release a total of 30 features a year and adhere to 45-day theatrical exclusivity. Bonta does not favour behavioural remedies because they are hard to monitor and enforce.

Ellison and Paramount are pushing hard to secure a settlement ahead of their self-enforced deadline of 1 October, from when the company must pay a ticking fee to WBD shareholders amounting to approximately $7m a day or $650m a quarter.

Bonta, meanwhile, is facing pressure after Paramount threatened to leave California.  

If the case cannot be settled, the two sides will meet in court on 2 March, a date set earlier this summer.