Paramount settlement talks include plan to keep company in California

By Josh Sisco

 

The settlement talks between Paramount Skydance Corp. and California officials over the lawsuit challenging the Warner Bros. Discovery Inc. acquisition have included a promise by the company to stay in the state.

 

Other terms being considered include an editorial board to monitor CNN, Paramount releasing 30 movies a year in theaters, an agreement to not negotiate distribution for all of the company’s channels together and a sale of some cable channels, according to a person familiar with the discussions, who asked not to be identified because the talks aren’t public.

 

Paramount Chief Executive Officer David Ellison and California Attorney General Rob Bonta have personally been involved in the settlement discussions, according to two people familiar with the matter. Some of the settlement talks have not included other states or the Writers Guild, which are also suing to block the Warner Bros. acquisition, the people said. Some of the parties do not approve all of the terms being discussed. 

 

Paramount is headquartered in New York, but has substantial operations in Los Angeles. Ellison and his chief legal officer, Makan Delrahim, have done little to quell rampant stories in the media that the company is considering relocating to another state.

 

Any settlement would likely need the support of all 12 Democratic states challenging the merger, along with the Writers Guild, said the people, who were granted anonymity to discuss a confidential process.

 

Paramount shares rose as much as 8.7% in after-hours trading on Friday following a Wall Street Journal report that the company was in advanced talks with California officials about settling the litigation. Reuters reported that a settlement could come this weekend or Monday. 

 

A California judge also ordered settlement talks, which are formally scheduled for Oct. 14-15. A trial date isn’t scheduled until March.

 

A spokesperson for Paramount declined to comment. A spokesperson for Bonta said Friday his office “cannot confirm or deny whether settlement talks are occurring or their alleged substance.”

 

Paramount has previously made public offers to release 30 films a year in theaters and to increase production of TV shows.

 

Bonta has repeatedly said he doesn’t favor those types of behavioral remedies because they are hard to enforce. The attorney general has said he prefers structural changes, such as a sale of assets.

 

Some opponents of the merger have called on Bonta to not settle. US Senator Elizabeth Warren of Massachusetts said in a social media post that it “would be a massive mistake to cave on the Paramount merger.” In his own post, actor Mark Ruffalo urged Bonta to not let “this lousy deal filled with empty promises go forward.” 

 

The attorney general told Bloomberg TV on Thursday that a sale of some intellectual property “could be a component” of a settlement. The deal would bring well-known Warner Bros. movie franchises such as DC Comics, Harry Potter and The Lord of the Rings into the Paramount fold.

 

Bloomberg News reported last month that Paramount has weighed selling cable channels such as HGTV and the Food Network as a way to settle the litigation. Investment bankers have approached would-be buyers about Warner’s New Line Cinema division. Bidders have also been interested in the Comedy Central cable network.

 

Paramount will be required to pay late fees of $7 million a day to Warner Bros. starting at the end of this month if a deal is not reached. A failed acquisition would force it to pay $7 billion to Warner Bros.

 

“Paramount has strong reasons to reach a workable compromise,” Bloomberg Intelligence analyst Geetha Ranganathan wrote in a research note Friday.