Paramount is negotiating a series of concessions with a coalition of state attorneys general as part of deep settlement discussions aimed at resolving litigation blocking its proposed $81 billion acquisition of Warner Bros. The talks, which took place over the weekend, focus on terms that would satisfy California's attorney general and other opponents of the deal.
The potential concessions under discussion include a $1.5 billion investment by Paramount into California's film and television production sector, according to people familiar with the negotiations. Additionally, Paramount executives and the multistate coalition are weighing commitments not to sell any of its studio lots and to remain based in California, a state the company had previously considered leaving due to opposition to the merger.
Negotiators are also exploring penalty clauses that would take effect if Paramount fails to deliver on earlier promises to produce 30 films annually after the merger completes. These penalties could include the forced sale of its stake in Miramax, the studio behind classics like No Country for Old Men and Pulp Fiction. Other options on the table involve divesting certain cable channels and establishing a dedicated board to safeguard editorial independence at CNN, a point of political contention throughout Chief Executive David Ellison's pursuit of Warner Bros.
No final agreement has been reached, and uncertainty remains over which terms will ultimately be included. Ellison has spent the past year advancing the massive acquisition to expand his entertainment empire, but it has faced pushback from politicians and Hollywood insiders alike. In July, California Attorney General Rob Bonta led a coalition of over a dozen Democratic-led states in filing an antitrust lawsuit to block the deal, arguing that the combined company would overly concentrate the theatrical film and cable television markets. The Writers Guild of America has also filed suit, claiming the transaction would reduce writing jobs and career opportunities in Hollywood.
On Sunday evening, roughly twenty demonstrators gathered outside the Elihu M. Harris State Building in downtown Oakland to protest the potential settlement, holding signs reading "Bonta: don't cave" and "Stop the mega-merger," while taking turns speaking out against the proposed resolution. Anne Leonard, co-founder of the First Amendment Committee, a nonprofit advocating for free speech, said, "Nothing has changed since the lawsuit was filed, and he should maintain the tough stance he took at the outset."
Pressure to settle has been mounting on both sides in recent months from California Governor Gavin Newsom, Los Angeles Mayor Karen Bass, gubernatorial candidate Javier Becerra, theater chains, and several Hollywood unions. The acquisition agreement between Paramount and Warner Bros includes a ticking-fee clause requiring Paramount to pay Warner Bros shareholders approximately $650 million per quarter, or about $7 million per day, starting next month until the deal closes. Paramount has also petitioned a federal judge to require the states and the Writers Guild to post nearly $1.9 billion in security bonds to continue challenging the acquisition, which would be forfeited to Paramount if it ultimately prevails.