Paramount and California attorney general make progress on merger talks

A possible settlement between Paramount Skydance and California Attorney General Rob Bonta has brought the companies’ proposed takeover of Warner Bros. Discovery closer to completion, according to people familiar with the discussions cited by the Binghamton Herald.

The negotiations concern an antitrust case filed by Bonta and 11 other Democratic state attorneys general. Their lawsuit threatens Paramount’s planned $111-billion acquisition of Warner Bros. Discovery, a transaction that would unite two of Hollywood’s largest entertainment companies.

The sources said talks have been constructive in recent days, although it remains unclear how far the parties are from a deal. Paramount declined to comment. Bonta’s office said potential settlement negotiations are confidential and would not confirm whether discussions were taking place or describe their contents.

A costly deadline for Paramount

Paramount Chief Executive David Ellison has a strong financial reason to resolve the case quickly. Beginning Oct. 1, Paramount would have to pay Warner Bros. Discovery shareholders an additional $7 million each day, on top of the $81 billion purchase price already agreed by the companies.

Ellison also wants to complete the acquisition and assume control of Warner Bros. before the midterm elections. Those elections could change the balance of power in one or both chambers of Congress, potentially altering the political environment surrounding the deal.

Financing the transaction would leave Paramount carrying about $80 billion in debt. Avoiding a prolonged court fight could help the company limit the financial pressure associated with a deal that is already highly leveraged.

The proposed merger has also become a political issue in California. Paramount has spent weeks pressing Bonta to withdraw the lawsuit, including warning that it could move Paramount’s operations away from Hollywood. That possibility has alarmed state and local officials who are seeking to restore film production employment in Los Angeles rather than risk further losses.

Several political leaders have urged the parties to reach an agreement instead of allowing the dispute to continue toward trial. A trial is scheduled for March 2. The companies and the states recently agreed to participate in court-ordered settlement talks in mid-October, after earlier negotiations planned for late August broke down.

Bonta ended those earlier sessions after accusing Paramount of spreading misleading information and “playing games.”

Possible conditions on the merger

The Wall Street Journal, which first reported that the negotiations had advanced, said the parties had considered keeping Paramount Pictures and Warner Bros. film studios as separate operations for a period after the acquisition. Such a measure would delay an immediate combination of the two studios.

Bonta has said he is willing to consider a settlement, but his previous position has been that Paramount should sell assets rather than rely only on temporary promises. He has questioned whether commitments made before a merger can be effectively enforced once the transaction is complete.

One proposal from Ellison would have the two studios release 30 films annually. Bonta has argued that this pledge alone would not resolve the concerns raised by the lawsuit, in part because prosecutors may have limited power to enforce such conditions after the deal closes.

The merger would bring major entertainment properties under one corporate roof, including HBO, CBS, CNN, Comedy Central, Food Network, and the Paramount and Warner Bros. film and television studios. The scale of that combination has made the transaction significant not only for the companies but also for workers, theaters and competitors across the entertainment business.

A recent report from the Los Angeles County Department of Economic Opportunity estimated that at least 4,500 jobs could disappear as a result of the combination. That prospect has contributed to opposition in Hollywood, where the merger is viewed as a consolidation of two businesses with overlapping operations.

Regulatory approval is advancing

The antitrust case is not the only regulatory hurdle. On Thursday, Paramount received approval from the Federal Communications Commission to bring Middle Eastern royal families into the combined company as significant investors. The FCC’s consent was needed because the transaction could cause Paramount-Warner to exceed foreign-ownership limits applying to broadcast license holders.

The agency is led by Brendan Carr, a Trump appointee. Ellison has also relied on family ties to President Trump and Republican figures in Washington while seeking support for the transaction.

Financial markets reacted positively to reports of the settlement discussions. Warner Bros. Discovery shares rose 8% to $30 in after-hours trading, while Paramount shares gained more than 7% to nearly $11.

A settlement could remove the most immediate legal threat to the acquisition, but the reported discussions have not produced a final agreement. Until the states’ objections are resolved, the merger remains exposed to the March trial and to the growing financial cost of delay.