New talks are planned as part of the antitrust lawsuit filed last month by California and 11 states to block the merger between Paramount and Warner Bros. California Attorney General Rob Bonta and Paramount Chief Executive Officer David Ellison are expected to meet on Monday, while the companies’ attorneys discussed their cable television and film businesses on Friday.
Bonta is expected to seek the sale of some television networks as a condition for approving the $81 billion merger. The attorney general is also insisting that Paramount’s film studio remain separate from Warner Bros.
States oppose the risk of excessive concentration
California and the other states argue that the merger could lead to excessive concentration in the film and cable television industries. The states are also concerned about the potential impact of the deal on film and television production and employment.
As pressure grows for the parties to reach a settlement, California Governor Gavin Newsom and Los Angeles Mayor Karen Bass have called for them to find common ground.
Financial pressure on the merger is growing
Paramount faces a significant financial burden to complete its deal with Warner Bros. The agreement includes a “ticking fee” provision requiring quarterly payments of approximately $650 million to Warner shareholders starting October 1.
If the case proceeds to trial as planned, Paramount could be required to pay more than $1 billion. The company said it could leave California if no agreement is reached before the fee takes effect; Tennessee is being considered the preferred alternative for Paramount.
Paramount opposes asset sales
Paramount opposes structural remedies as part of the merger. The company has pledged to release 30 theatrical films a year but will not accept asset sales or management restrictions that could reduce the savings expected from the merger.
