Paramount in advanced talks to settle Warner Bros. Discovery merger fight

Paramount Skydance is in advanced talks with California Attorney General Rob Bonta to settle the 12-state court fight holding up its $111 billion bid for Warner Bros. Discovery.

The Wall Street Journal first reported the negotiations, in a story detailed by Variety on 18 September. No agreement has been signed. The talks are ongoing and could still fall apart.

At issue is an antitrust lawsuit, meaning the states argue the takeover would harm competition. California is leading a coalition of 12 attorneys general seeking to block the deal. Bonta filed the original challenge in July.

One compromise under discussion would keep Paramount's and Warner Bros.' movie studios running separately for a period, rather than combining them at once. Bonta has previously said that kind of arrangement under common ownership would be a behavioural remedy, and that he wants a structural remedy involving separate ownership.

The clock is loud. A judge has set trial in the states' case for March 2027. Paramount has asked the court to order the 12 states and the Writers Guild of America, which filed its own antitrust suit to block the deal, to post a $1.88 billion bond.

That bond would cover Paramount's claimed losses if it wins in court. The losses centre on a ticking fee, a daily payment to Warner Bros. Discovery shareholders while closing is delayed, running at $7 million a day from 1 October. A hearing on the bond request is set for 24 September.

The talks are a turnround. California broke off settlement discussions in August, with Bonta's office accusing Paramount of leaking and misrepresenting the process, according to The New York Times. A judge has since ordered Paramount and the states to attend two days of court-ordered settlement talks in October, as reported by Deadline.

What makes this stand out is how much is stacked around the merger. Paramount says its all-cash bid offers $31.00 per Warner Bros. Discovery share, in a company statement. The deal is backed in part by Larry Ellison and the sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi. Federal regulators have cleared foreign ownership of up to 49.5% of Paramount's equity if the deal closes.

For viewers and crews, the practical questions are jobs and films. Chief executive David Ellison has promised at least 30 cinema releases a year after a combination, according to The Wall Street Journal. He has also told executives he may move operations out of California if the deal cannot close by the end of September, floating Tennessee, Texas or Georgia as options.

Paramount maintains the transaction is lawful and pro-competitive. For now, everything rests on whether California and Paramount can close the gap before October.