Paramount Skydance continues to criticize a 12-state antitrust lawsuit seeking to block the company’s pending merger with Warner Bros. Discovery after California Attorney General Rob Bonta, the lead plaintiff, proposed possible concessions to settle the case.
In an interview with the KQED radio program Forum on Wednesday, Bonta suggested a possible settlement could include separating a news channel, a streaming service, or a film and television studio from the $110 billion merger.
“We would be interested in potential structural remedies,” he said. “What’s a structural remedy? It means keeping corporate entities separate. Having a suite of cable channels that remain separate from this merger, from this merged company. Having a streaming service that’s separate. Having a news channel or a TV studio that’s separate. Having a film studio that’s separate.”
If Paramount and Warner Bros. close the transaction by the end of September, the two entertainment companies would put their film, television, news, and streaming assets under one umbrella. Regarding streaming, Paramount+ and HBO Max would combine into one platform that would amass over 200 million global subscribers.
Bonta is concerned the merger would consolidate too much market power into one entity.
With a possible settlement, he explained that structural remedies would be preferable over behavioral remedies, which relates to Paramount CEO David Ellison’s promise to release 30 theatrical films per year between its own studio and the Warner Bros. studio.
“We would be interested in considering structural remedies, but the behavioral remedies have traditionally not proven to be effective,” the Democratic attorney general said, because they are “tough to enforce” and can be “easily revoked.”
Paramount took issue with Bonta’s comments, arguing some of the concessions are irrelevant to the multistate lawsuit he filed this week.
“Attorney General Bonta’s comments today go well beyond his own complaint, which centers on theatrical distribution and cable bundling — not streaming or news,” a Paramount spokesperson told Politico.
“That mismatch says a lot about his true priorities rather than the case actually pending in court,” the spokesperson said. “This merger brings together complementary businesses to create a stronger competitor in a media landscape reshaped by streaming, giving consumers more choice and better content, not less. We’re confident in the merits of our position and remain focused on closing the transaction.”
After litigation was brought on Monday, Paramount vowed to defend its merger with Warner Bros., as both companies seek to close the transaction by the end of the third quarter on Sept. 30. The earliest date that the deal can be finalized is July 22. Bonta wants a federal court in the Northern District of California to issue a temporary restraining order by then.
A court hearing on the plaintiffs’ motion for a temporary restraining order is set for Friday. U.S. District Judge Araceli Martinez-Olguin, an appointee of former President Joe Biden, will preside over the hearing.
She was handed the case after U.S. District Judge P. Casey Pitts, also a Biden appointee, granted Paramount’s motion seeking his recusal from the case due to an “appearance of bias” in favor of the states.
Martinez-Olguin is already considering a preexisting consumer lawsuit brought by Paramount+ subscribers regarding the merger. She is also overseeing a lawsuit brought by the Writers Guild of America. Its legal challenge is similar to the California-led complaint. The state and WGA cases have not been consolidated.
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It remains to be seen whether Paramount and Warner Bros. can survive the slew of lawsuits and close their merger in the next two months. If the defendants can’t do so, Paramount will have to pay Warner Bros. shareholders a “ticking fee” that would amount to about $650 million for every quarter the deal is not closed after Sept. 30.
The high-stakes court fight comes over one month after the Department of Justice approved the merger, which federal antitrust officials described as pro-competitive. Bonta doesn’t share the same view.