Paramount Skydance is moving closer to the finish line of its yearlong pursuit of Warner Bros. Discovery as the company’s weekend settlement negotiations with the state attorneys general reach a critical stage. Meanwhile, opponents of the merger are rallying to protest what it warns is shaping up to be a “cave” by the 12-state coalition that has sued to block the Paramount-Warner Bros. on antitrust grounds.
The federal lawsuit filed in July by 12 states, including California and New York, is the last obstacle that Paramount has to clear to close the $110 billion acquisition agreement that it reached in late February. Paramount is on the hook to pay WBD shareholders an additional $7 million a day as of Oct. 1 if the deal is not closed, hence the urgency for Paramount. Sources familiar with the situation said the negotiations with the state AGs, by Bonta, appeared to be moving in a positive direction.
The sides were expected to be in communication Sunday but will pause by evening for the Yom Kippur holiday if the sides have not yet come to an agreement. As talks between the two sides continue — with the expectation that the situation could come to a head as soon as Sunday night — antimerger activists are planning a series of rallies in Oakland, Los Angeles and New York. California Attorney General Rob Bonta has demanded “structural remedies” as part of the agreement, but rumors have indicated that his office may agree to something that falls well short of that.
The Wall Street Journal, citing unnamed sources, reported Friday that the deal might include operating the two studios “separately for a period,” rather than immediately combining them. But David Ellison, the CEO of Paramount Skydance, has already agreed to separate operations in some form. In a Feb. 28 letter to Sen.
Laura Friedman, two California Democrats, Ellison wrote: “my promise to you is to build a stronger Hollywood, by keeping both of these legacy studios operating separately, thereby preserving and potentially increasing jobs.” The discussions have also included output — including Ellison’s longstanding pledge to produce at least 30 films a year, according to two sources familiar with the talks. Meeting remotely, the two sides have also discussed a written agreement to remain in California and a third-party “editorial adviser” for CNN and CBS. Bonta has repeatedly said that such “behavioral” remedies are weak and difficult for states to effectively enforce.
In an interview with Variety last month, he also described separate operations as a “behavioral” remedy. Discovery assets as separate entities from Paramount could be a path forward for a settlement, which might also include job preservation commitments for a fixed period of time. Sources noted that the teams led by HBO CEO Casey Bloys and JB Perrette, president of WBD streaming and gaming and the business leader of HBO Max, appear to be shifting into deal-closing mode — a process both know well after years of M&A at Time Warner and Discovery Communications.
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