California Attorney General Calls Off Settlement Talks With Paramount As Hollywood Pressure Builds To Resolve Merger Lawsuit

Talks to settle a multistate lawsuit holding up the $110 billion merger between Paramount and Warner Bros. Discovery are off the table for now despite growing Hollywood pressure to resolve the litigation. In July, a federal judge temporarily blocked the merger due to a lawsuit brought by California and 11 other Democrat-run states that alleges the deal violates federal antitrust laws and would hinder competition in Hollywood. The CEO of Paramount, David Ellison, argued in a column published in the New York Times earlier this month that he believes the lawsuit is really about concerns regarding how he would manage CNN. Mr. Ellison and Paramount executives have sought to ramp up pressure on the California attorney general, Rob Bonta, to reach a settlement.The two sides were set to meet on Monday. However, in a statement, Mr. Bonta called off the meeting, saying, “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.”The attorney general said that when Paramount stops “playing games and engages sincerely,” he will be “happy” to meet. Paramount did not respond to the Sun’s request for comment by the time of publication. Mr. Bonta’s statement came after the Wall Street Journal reported that the attorney general was expected to ask Paramount to sell off some of the cable channels it is set to acquire as part of the WBD deal, and to agree to keep its movie studio separate from Warner Bros. The report did not include any specifics about which cable channels Mr. Bonta would like it to sell off.However, Paramount’s chief legal officer, Makan Delrahim, said at Politico’s California Agenda conference earlier this month that the idea of selling CNN is “on the table” if it would help resolve California’s lawsuit. Paramount executives believe that the future of CNN is a major sticking point when it comes to resolving the lawsuit. Last year, Mr. Ellison hired a new editor in chief of CBS News, Bari Weiss, and tasked her with cleaning up what he saw as a left-wing, anti-Israel bias at the Tiffany Network. Earlier this year, Ms. Weiss fired three “60 Minutes” correspondents — Sharyn Alfonsi, Cecilia Vega, and Scott Pelley, and several staffers at the newsmagazine program as she engineered an overhaul of the show.CNN staffers and other liberal commentators have expressed concerns that Mr. Ellison would try to make similar changes at the cable news network to shift its editorial voice to the right. Mr. Ellison has promised that CNN would retain its editorial independence.Paramount agreed to delay its deal until June 1, 2027, or until the trial in California lawsuit concludes. But with the merger on hold, it could be on the hook for $1.88 billion as it agreed to a “ticking” fee of $7 million a day for every day the deal is delayed beyond September 30. The Hollywood giant is trying to leverage the ticking fee to pressure Mr. Bonta into backing down.Last week, Paramount asked a federal judge to order California and the other states to post a bond of $1.88 billion to cover the cost of the ticking fee if the deal goes through. Mr. Bonta responded to that request by accusing the studio of trying to “blackmail” California.It is unclear whether the judge overseeing the case, Araceli Martínez-Olguín, a President Biden appointee, will grant the request as she declined to require California to pay the bond when she issued the order that temporarily blocked the merger, saying the lawsuit had been brought to “enforce important public interests.”Mr. Ellison has also threatened to relocate Paramount’s headquarters if Mr. Bonta does not settle.While Paramount executives are pressuring Mr. Bonta to make a deal, some Hollywood organizations are also lining up on Paramount’s side and urging the attorney general to settle. Last week, the Directors Guild of America urged Mr. Bonta to make a deal to end the litigation. The group said that while it believes mergers offer “few benefits to workers,” it is concerned that holding up the deal could delay production of TV shows and movies and negatively impact its members. The three largest movie theater chains in America — Cinemark, Regal Cinemas, and AMC Theatres — also expressed support for the deal last week.

California Attorney General Calls Off Settlement Talks With Paramount As Hollywood Pressure Builds To Resolve Merger Lawsuit

California Attorney General Calls Off Settlement Talks With Paramount As Hollywood Pressure Builds To Resolve Merger Lawsuit

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