California Attorney General Rob Bonta canceled a scheduled meeting with Paramount representatives Monday to discuss a potential settlement of the 12-state lawsuit seeking to block the company’s proposed acquisition of Warner Bros. Discovery, according to a report by Laurel Rosenhall of The New York Times.
In a statement provided to Sports Media Watch, Bonta alleged that Paramount has acted in bad faith following a meeting last week.
“My office was scheduled to meet with Paramount on Monday, August 24th,” Bonta said in the statement. “I have pulled down this meeting. As I’ve said before, generally for all cases, I prefer to resolve disputes in the boardroom, not the courtroom. As I’ve also said, if the opposing party in litigation wants to meet in good faith to make a sincere effort to resolve the case, we’ll meet.
“My office had a meeting with Paramount on Friday. Paramount did not maintain the confidentiality of that meeting. Not only did Paramount leak the alleged substance of settlement discussions, but they misrepresented these discussions, demonstrating a lack of good faith. As soon as Paramount stops playing games and engages sincerely, my office is happy to meet again.”
Joe Flint and Jessica Toonkel of The Wall Street Journal reported that Bonta was expected to request Paramount divest “some” of its cable channels to win approval for the deal. It remains unknown if any of those channels were to include networks that televise sports programming, such as TNT, tbs and truTV. In addition to those networks, the WBD portfolio includes HGTV, CNN, TLC and Food Network.
Flint and Toonkel also reported that Bonta wants the Warner Bros. movie studio to operate standalone “with little interference from” Paramount chairman/CEO David Ellison. Ellison has pledged to release a minimum of 30 theatrical productions annually for at least three years, per a report by Jeremy Fuster of TheWrap. Paramount would plan to combine HBO Max and Paramount+ into a singular streaming service upon completion of the merger.
Earlier in the month, Matthew Belloni of Puck reported that Ellison is planning to move the company out of California if Bonta “did not come to the table to negotiate a settlement” and set a deadline of October 1 “to resolve the matter.” California Gov. Gavin Newsom indicated support for a settlement in the case in comments made to reporters last week, citing Bonta’s wish to have “this settled in the boardroom, not the courtroom.”
“We share AG Bonta’s concerns about the public discussions and misreporting that has surrounded this deal,” a Paramount Skydance spokesperson said in a statement several hours after publication. “As we have assured the Attorney General’s office, Paramount has not been the source of the leaks of any of our confidential discussions with the AG’s office. We remain hopeful and stand ready to continue good faith discussions to resolve the Attorneys General suit and move forward with our plans for increased competition and increased output to the benefit of the talent and entertainment workers.”
Paramount will need to start paying a daily $0.25/share “ticking fee” to WBD shareholders starting later next month for every quarter the $111 billion deal does not close. The ticking fee, which equates to approximately $650 million/quarter, would be payable to the shareholders should the deal reach completion, for which Paramount said it has received all necessary regulatory approvals.
Bonta led a coalition of 12 state attorneys general in suing to block the deal, arguing that it would restrict competition and harm audiences. The judge overseeing the case issued a temporary restraining order against the deal, and shortly thereafter, Paramount agreed to delay closing until either June 1, 2027 or five days after a legal decision in the suit is rendered, whichever comes first. The company later requested that the states post a $1.88 billion bond to cover the costs associated with the transaction being delayed. The payout, which the company would receive if it wins the case, would partially offset the ticking fees. A trial date is set for March of next year.
If the deal is closed as currently constituted, the company would hold net debt of $79 billion leveraged at 6.5x EBITDA before synergies. Paramount has projected more than $6 billion in synergies from the deal, which would be in addition to the ongoing synergies from Paramount’s merger with Skydance. WBD is able to walk away from the deal on June 4, 2027 and collect a $7 billion termination fee, which would also be payable if the deal does not go through “due to an antitrust or foreign regulatory injunction permanently prohibiting” its closure.
