California Attorney General Ramps up Criticism of Paramount

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California Attorney General Rob Bonta took Paramount to task Tuesday, accusing the company of focusing on "the court of public opinion instead of the court of law" as it tries to preserve its $81 billion acquisition of Warner Bros. Discovery.

Speaking at a press conference, Bonta expressed confidence that the lawsuit he and 11 other state attorneys general filed last month to block the media merger will succeed in court. He said that is why Paramount has been eager to meet with his office to discuss potential settlement conditions.

Bonta this week canceled a planned Monday meeting with Paramount after a Wall Street Journal article reported a previously undisclosed meeting between the two sides that took place Friday.

Bonta blamed Paramount for disclosing the Friday meeting, a charge Paramount denied. Bonta indicated that he is still willing to meet with Paramount but not until they "put a lid on the leaks" and "engage in a way that is sincere."

A Paramount spokeswoman said the company "stands ready to continue good faith discussions to resolve the Attorneys General suit and move forward with our plans for increased competition and increased output to the benefit of the talent and entertainment workers."

Pressure is growing for Bonta and Ellison to reach an agreement that would allow the merger to proceed. California Gov. Gavin Newsom, gubernatorial candidate Xavier Becerra and Los Angeles Mayor Karen Bass have urged the two sides to find common ground.

Starting Oct. 1, Paramount must pay Warner shareholders roughly $650 million a quarter until the transaction closes. If the case goes to trial in March as scheduled, those payments could exceed $1 billion.

Paramount has indicated it is prepared to leave California if it can't reach an agreement with Bonta and the other states before the payments begin. Tennessee is the company's preferred destination, people familiar with its thinking have said.

Bonta remains adamant that the Paramount-Warner deal is illegal and would require significant structural remedies to win the states' approval. The merger would create a media giant with two movie and television studios, dozens of cable channels, two subscription streaming services and a broadcast network.

Bonta dismissed promises Paramount has made to release 30 movies a year once the deal closes. "A robust structural remedy it is not," Bonta said.

Among the issues Bonta is concerned about is the market power the combined companies would have in the cable television and film industries. The Journal previously reported that the states will want Paramount to divest some cable channels and commit to keeping its movie studio separate from Warner Bros.

Bonta has also highlighted potential job losses from the merger, which he has said could cost California as many as 10,000 jobs and billions of dollars in economic activity, citing a recent study.

Asked if the antitrust suit was politically motivated or driven by the idea of Paramount owning CNN, Bonta said it is a "straight-up" antitrust case.

"There's no political agenda hiding behind the antitrust case," Bonta said "What you see in our complaint is what you get."

Bonta also suggested that Paramount had made promises to major theater chains in return for them encouraging a settlement.

"It looks like Paramount reached out to them and offered them something," Bonta said. "Some people call that buying them off."

A Paramount spokeswoman declined to comment on Bonta's assertion.

When it announced the deal, Paramount agreed to keep movies in theaters for at least 45 days and wait three months before releasing films on subscription video on demand.

 

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