After a bitter standoff, Paramount Skydance and California Atty. Gen. Rob Bonta have made progress in settlement talks that could push Hollywood’s massive merger over the finish line, people familiar with the matter said Friday.
The two sides have quietly been negotiating a truce to end the antitrust lawsuit brought by Bonta and 11 other Democratic state attorneys general — a legal volley that has threatened to derail Paramount’s $111-billion takeover of Warner Bros. Discovery.
It’s not clear how close to a resolution the two parties are, but talks in recent days have been constructive, one of the knowledgeable sources said.
Paramount Chief Executive David Ellison is highly motivated to end the court battle with Bonta before Oct. 1, when his company will be obligated to make a higher payout — an extra $7 million a day — to Warner Bros. Discovery shareholders on top of the $81 billion the company has already agreed to pay.
For weeks, Ellison and his team have been ratcheting up political heat on Bonta to abandon his lawsuit, including threatening to pull Paramount out of Hollywood — a scenario that has rattled state and local lawmakers who desperately want to bring film jobs back to Los Angeles, not lose thousands more.
Paramount declined to comment.
A spokesperson for Bonta’s office said in a statement: “Potential settlement talks are confidential. We cannot confirm or deny whether settlement talks are occurring or their alleged substance.”
The merger of two legendary giants would reshape the entertainment industry, bringing together HBO, CBS, CNN, Comedy Central, Food Network and the Warner Bros. and Paramount film and TV studios.
Both sides have incentives to settle.
Ellison, who has leaned on his family’s connections to President Trump and Washington Republicans, would like to avoid taking on more debt for the already highly leveraged deal. Already, Paramount is prepared to take on $80 billion in debt to finance the Warner Bros. buyout.
Ellison also is eager to close the transaction and take the reins at Warner Bros. before the midterm elections, which could see one or both houses of Congress tip to Democrats.
Bonta has been on a winning streak with favorable rulings against the Trump administration and social media giant Meta, and he doesn’t want to overplay his hand or risk having his coalition of state attorneys fall apart.
A parade of political leaders have pleaded with Bonta and Ellison to settle the antitrust rather than stoke the tensions until a trial, which has been scheduled for March 2.
Earlier this week, the two sides agreed to sit down for court-mandated settlement talks in mid-October. The parties had been set to negotiate in late August, but Bonta pulled the plug on those sessions, accusing Paramount of leaking misinformation and “playing games.”
The Wall Street Journal first reported the two sides were in advanced settlement talks. The newspaper said the parties have discussed compromises, including agreeing to keep Paramount Pictures and Warner Bros. film studios separate for a period of time rather than immediately collapsing them into one unit.
Warner Bros. Discovery stock jumped 8% to $30 a share in post-market trading after news of the settlement negotiations. Paramount climbed more than 7% to nearly $11 a share.
Bonta has repeatedly said he was open to a settlement, but he has previously insisted that Paramount sell assets rather than simply rely on short-term commitments to win the favor of theater owners and the state attorneys general. Bonta has said that Ellison’s pledge for the two studios to release 30 films a year wasn’t enough to end the legal wrangling because prosecutors often are powerless to enforce conditions after a deal closes.
The merger has been unpopular in Hollywood because the combination of two similar companies is expected to erase at least 4,500 jobs, according to a recent report from Los Angeles County’s Department of Economic Opportunity.
On Thursday, Paramount received the Federal Communications Commission’s blessing to bring in Middle Eastern royal families as significant stakeholders of the combined company. The agency, led by Trump appointee Brendan Carr, needed to give its nod so that Paramount-Warner could exceed foreign ownership restrictions for broadcast license holders.
