Paramount and California to hold preliminary talks on Monday over Warner Bros deal: Report

Paramount and California state officials are set to meet on Monday, August 24, to discuss a potential settlement path of the state's antitrust lawsuit aimed at blocking Paramount's acquisition of Warner Bros. Discovery, the New York Times reported on Saturday.

California Attorney General Rob Bonta and 11 other state attorneys general filed a lawsuit in July seeking to block the proposed $110 billion acquisition.

The deal would combine two of the most storied film studios in Paramount and Warner Bros., as well as streaming platforms Paramount+ and HBO Max. The potential deal would create the largest portfolio of TV networks in the US.

It was alleged that the deal would lessen competition in film distribution and cable television, harming theaters and pay TV distributors. States including New York, Arizona and Minnesota argued the deal would harm theaters and television distributors, raise prices for consumers and make wages less competitive for workers.

California Attorney General Rob Bonta had said in a release at the time announcing the lawsuit 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 US."

Pressure to settle the suit has grown in recent weeks as California Gov. Gavin Newsom, Los Angeles Mayor Karen Bass, and the Directors’ Guild of America, among others, have called for a settlement.

However, it is unclear if the latest discussions will lead to a settlement, the Times said, citing people familiar with the discussions.

On Thursday, California Attorney General Rob Bonta told CNBC that the acquisition would require “robust structural remedies” to reach a settlement in the antitrust case.

"[Paramount] wanted to talk about everything except for what this case is about. They want to talk about the streaming market, which we don’t allege in our complaint. They want to talk about CNN, which is not a focus of our complaint. They want to talk about the foreign regulators. We want to talk about the three markets that we set forth in our complaint, where we think there’s antitrust violation,” Bonta said on CNBC.

Paramount had previously agreed to delay the acquisition to as late as June 2027 due to the legal challenge, and a trial is set for March.

However, if the deal is delayed beyond September 30, Paramount will owe Warner Bros. Discovery shareholders a “ticking fee” that could amount to roughly $650 million in cash value every quarter, according to previous CNBC reporting.

Should the deal fall apart entirely, Paramount would owe WBD a $7 billion breakup fee, the report added.

In June, the antitrust division of the US Department of Justice cleared the proposed merger. European antitrust regulators also approved the deal in July.

However, US state officials, as well as the Writers Guild of America and several prominent Hollywood actors and actresses, have argued that the merger would not only reduce competition but result in job losses in the entertainment industry.

1. The talks are preliminary, and there is no assurance that they will lead to meaningful negotiations toward a settlement, the report said, adding that Paramount requested the meeting.

Source: Read the original article on www.livemint.com

Additional coverage from www.nytimes.com:

The discussions on Monday are an early effort to resolve a lawsuit that California and 11 other states filed to block Paramount’s $111 billion acquisition of Warner Bros. Discovery.

By Lauren HirschBenjamin Mullin and Laurel Rosenhall

Representatives for Paramount and the State of California are set to meet on Monday to discuss a potential path for settling the state’s lawsuit that seeks to halt Paramount’s acquisition of Warner Bros. Discovery, four people briefed on the upcoming discussions said.

The talks are preliminary, and there is no assurance that they will lead to meaningful negotiations toward a settlement, said the people, who spoke on condition of anonymity because the discussions were private. Paramount requested the meeting, two of the people said.

Paramount’s merger with Warner Bros. would create a media powerhouse combining two major movie studios, multiple streaming services and the news outlets CNN and CBS News.

Last month, California led 12 state attorneys general in suing to block the deal, arguing it would create a media company with outsize market power in cable television and studios.

The meeting, which will include senior executives and lawyers from each side, has been in the works for a little over a week, said one of the people. It remains unclear what resolution Paramount might offer that would satisfy the attorneys general. Paramount declined to comment for this article.

California’s attorney general, Robert Bonta, has said he would be wiling to accept only structural remedies to resolve the lawsuit, which typically means selling off pieces of a business. Executives are often reluctant to hive off parts of a newly merged company because they have already made financial assumptions about the combined operations.

We are having trouble retrieving the article content.

Please enable JavaScript in your browser settings.

Thank you for your patience while we verify access.