Paramount and state AGs will head to negotiating table in WBD merger fight

By Brian Stelter, CNN

(CNN) — Representatives for Paramount and the parties suing to block its takeover of Warner Bros. Discovery (WBD) are set to meet next week for talks that could lead to a settlement.

The two sides apparently remain far apart, however, and the plaintiffs may prefer to take their arguments to court at the antitrust trial that’s scheduled to start next March.

California Attorney General Rob Bonta said Friday night that any resolution would have to include “robust structural remedies” that would change the shape of the media mega-merger.

Analysts have warned that the structural remedies Bonta has in mind might be deal-breakers for Paramount, making any settlement talks ultimately unproductive.

Still, the talks have to start somewhere.

Paramount is trying to merge its movie studio and television operations with WBD, the parent of CNN, HBO, Discovery, the Warner Bros. studio and many other assets. A coalition of 12 Democratic state attorneys general filed suit last month to block the merger, arguing the merger would violate antitrust law and harm Hollywood. The Writers Guild of America filed a parallel suit.

The long road to trial will be expensive for Paramount since a “ticking fee” will begin to raise the price of WBD starting October 1.

Partly for that reason, Paramount has been pushing to get to the proverbial negotiating table. The company has insisted that the WBD deal is pro-competitive, and has asserted that the deal’s opponents are driven by political concerns, including the prospect of CNN changing hands. Bonta has disputed those charges.

Numerous California politicians, including outgoing Gov. Gavin Newsom, have called for a pre-trial resolution to the conflict. Some have cited Paramount’s talk about potentially moving operations out of California.

Bonta has dismissed that talk as a “blackmail” attempt, but he has said he is ready for “good faith” talks with Paramount.

After Variety reported on Friday that Bonta’s office would be meeting with Paramount representatives on Monday “to discuss a potential settlement,” Bonta issued a statement designed to maintain his leverage in any negotiations.

“As I’ve said before, generally for all of my cases, I prefer to resolve disputes in the boardroom, not the courtroom,” Bonta said in a statement to CNN. “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. And as I have further said, any potential discussions about the Paramount-Warner Brothers merger will be unproductive absent robust structural remedies on the table that address our concerns.”

Structural remedies refer to divestitures, spin-offs and other changes to the makeup of the combined company.

Newsom suggested Friday that secret negotiations may already be underway, saying, “I know there are many meetings that are going on, and there’s a lot of conversation.”

The governor did not elaborate, and a spokesperson for Bonta’s office declined to comment. A Paramount spokesperson also declined to comment on the report about settlement talks.

Earlier this week, Paramount asked the judge overseeing the case, Araceli Martinez-Olguín, to set a $1.9 billion bond. The judge said she’ll hold a hearing to consider the request on September 24.

As part of the pre-trial process, Martinez-Olguín also indicated that Paramount and the plaintiffs would engage in mediation.

For that reason, people shouldn’t read too much into any scheduled meeting on Monday, former TV executive and noted industry commentator Evan Shapiro wrote in a blog post.

“The judge in this case has mandated that the parties meet to make good faith attempts to settle,” Shapiro wrote. “This meeting is not elective by either side. It’s court mandated.” He argued that Bonta’s team continues to “hold all the cards” despite Paramount’s push for a settlement.

In his late-night statement on Friday, Bonta said, “As it stands today, the proposed Warner Bros./Paramount merger will mean higher costs, less competition, lower wages, job cuts, and fewer movies and TV shows. This merger violates long-standing federal antitrust law, and we are committed to enforcing the law.”

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