Paramount, California AG to Discuss Warner Bros. Discovery Lawsuit Settlement

Representatives for Paramount are reportedly set to meet with the California Attorney General's office on Monday to explore a potential resolution for the antitrust lawsuit that aims to prevent Paramount's acquisition of Warner Bros. Discovery. The New York Times reported this development on Saturday.

Recent weeks have seen increasing calls for a settlement from various entities, including California Governor Gavin Newsom, Los Angeles Mayor Karen Bass, and the Directors' Guild of America. However, according to individuals familiar with the upcoming discussions, there is no guarantee that these latest talks will advance into substantive negotiations for a settlement.

Earlier on Thursday, California Attorney General Rob Bonta informed CNBC's David Faber that any settlement for the antitrust case would necessitate "robust structural remedies."

Bonta stated on CNBC that Paramount's discussions have steered away from the core issues of the lawsuit, focusing instead on the streaming market and CNN, neither of which are central to the complaint. He emphasized that the state's focus remains on the three specific markets identified in their complaint as having antitrust violations.

A coalition of 12 state attorneys general initiated a lawsuit in July, opposing the proposed $110 billion merger that would combine the prominent film studios Paramount and Warner Bros., along with their streaming services Paramount+ and HBO Max. This potential deal is anticipated to create the largest collection of TV networks in the United States.

In a statement released at the time of the lawsuit's announcement, Bonta expressed that "The unlawful merger of these two entertainment behemoths would lead to higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately, audiences on every sofa and movie theater seat in the U.S."

Paramount had previously agreed to extend the acquisition deadline to June 2027 due to the legal challenge, with a trial scheduled for March. However, if the deal extends beyond September 30th, Paramount would be obligated to pay Warner Bros. Discovery shareholders a "ticking fee," which could amount to approximately $650 million in cash value per quarter, as previously reported by CNBC. Should the deal ultimately fail, Paramount would owe WBD a $7 billion termination fee.

In June, the U.S. Department of Justice's antitrust division gave its approval to the proposed merger. European antitrust regulators also granted their approval for the deal in July.

Nevertheless, state officials in the U.S., along with the Writers Guild of America and several notable Hollywood actors and actresses, have voiced concerns that the merger would not only diminish competition but also lead to job losses within the entertainment sector.