warner bros.

Citing Hollywood’s already struggling production economy, two influential industry unions have jointly called on Paramount Skydance Chairman David Ellison and California Atty. Gen. Rob Bonta to settle their antitrust fight.

The Directors Guild of America and the International Alliance of Theatrical Stage Employees — which represent a combined 200,000 union members — are turning up the political pressure to try to resolve the clash over the Paramount-Warner Bros. merger, which has already carved deep divisions throughout the industry.

The DGA and IATSE’s unusual missive comes as Paramount has been trying to drum up support for the deal and while
development projects reportedly are being put on hold. Paramount executives and others have decried the delay in deciding whether the deal moves forward. Bonta and Paramount are now poised to slug it out in an Oakland courtroom next spring.

“Our collective members are concerned about their futures, and the future of the industry,” DGA Executive Director Russell Hollander and IATSE President Matthew D. Loeb wrote Thursday in their three-page letter to Ellison and Bonta.

“We are aware of productions that have been put on hold or canceled altogether, leading to further reductions in available work for our members and other industry workers,” the letter reads in part.

The effort adds heat to a growing campaign urging Bonta to bend in his fight to block the industry- reshaping deal that would combine the Warner Bros. and Paramount film and television studios, HBO, CBS, CNN, HGTV and Comedy Central.

Earlier this week, California’s Democratic gubernatorial nominee, Xavier Becerra, said he favored a settlement. Republican Steve Hilton has decried the antitrust lawsuit as being politically motivated.

Gov. Gavin Newsom, who leaves office next year, has stayed above the fray.

Paramount and Bonta’s office didn’t immediately comment.

The Writers Guild of America last month joined Bonta’s coalition of state attorneys general in filing lawsuits to upend the $111-billion transaction, saying the Paramount-Warner combination violates U.S. antitrust laws and would decimate the entertainment industry by erasing jobs and reducing pay.

At issue is the $81 billion in debt that Ellison would have to take on to pay Warner Bros. Discovery shareholders for the keys to the studios and HBO.

WGA leaders and others have warned that level of debt would choke the two historic studios, creating a more devastating sequel to 2019‘s combination of the Disney and Fox studios, and the 2022 takeover of Warner Bros. by Discovery.

The union leaders conceded they weren’t merger fans, and they stopped well short of asking Bonta to throw in the towel.

Instead, they listed nine conditions — including requiring Paramount to maintain its operations in Hollywood and a commitment to make film and television shows in the U.S. — as part of any settlement.

The unions want Ellison to make an enforceable commitment that Paramount and Warner Bros. studios each release 15 films into theaters a year. They also want a 45-day theatrical window so that cinema chains can continue their rebound.

Some of the DGA and IATSE terms may be difficult for Ellison to swallow. Already, Paramount is looking to shave expenses to come up with the $81 billion promised to Warner Bros. shareholders. Sources have said Ellison’s suggestion to move Paramount from its picturesque Hollywood campus is designed, in part, to attract financial incentives from another state, such as Tennessee, eager to help with a relocation.

Among the conditions, the DGA and IATSE asked that Paramount’s and Warner Bros.’ motion picture units be kept as “as separate studios, with each studio maintaining its own production, distribution, marketing and exhibition groups as distinct divisions.”

One of the goals of the merger is to shave costs by consolidating overlapping business divisions and back-office functions.

The union leaders also want Warner Bros. television studio to operate independent from the Paramount and CBS production arms. They called on HBO to remain a linear television channel and available on third-party platforms, including Amazon.

Loeb and Hollander’s requests are designed to keep production jobs in the U.S.

They asked Ellison to commit to producing films and TV shows in the U.S. “at no less than the average percentage produced in the United States during the last five years” excluding 2020, the pandemic year, and 2023, when two strikes idled production.

“Our goal, with respect to the proposed merger, has always been to achieve an outcome that ensures a vibrant, competitive marketplace for the production, distribution, and licensing of film and television programming that serves the interests of consumers and filmmakers alike,” Hollander and Loeb wrote.

“We believe that these conditions, if secured through a binding agreement, will largely serve this purpose,” the said.

Bonta previously has said his preference would be structural remedies — divesting key business units — rather than “behavioral” compromises that could evaporate soon after the merger closed.

Should the two sides fail to hash out a settlement with conditions, Loeb and Hollander asked Ellison and Bonta to seek an earlier trial date for the legal showdown.

A federal judge set a March 2 date — despite Paramount’s request to hold the proceedings in November.

In less than a month, Paramount Skydance Chief Executive David Ellison has exhibited a dizzying range of emotions as the goal line for the coveted $111-billion Warner Bros. Discovery deal has moved farther away.

The tech scion initially exuded confidence that Hollywood’s biggest merger in decades was on a fast track to completion by September. Ellison and others downplayed efforts by California Atty. Gen. Rob Bonta to challenge the acquisition — until Bonta and 11 other Democratic state attorneys general gained momentum in their antitrust lawsuit, which now threatens to derail Paramount’s Warner Bros. deal or, at least, make it significantly more expensive.

Ellison and his executives have vacillated from anger to acceptance. Last week, Ellison attempted a high-profile reputation reboot, extolling his love for movies and blaming politics for opposition to the deal.

The mogul has told investors the company is willing to negotiate a settlement with Bonta in hopes of completing the massive merger as soon as possible.

But Ellison also is making contingency plans to shift Paramount’s historic home base from Melrose Avenue to Tennessee — or perhaps Texas — as early as this fall.

Paramount’s board has approved Ellison’s relocation plans, according to people familiar with the situation who were not authorized to speak publicly. Ellison shared the concept with his executive leadership team in a meeting last Wednesday but said his preference was to remain in California, these people said.

The proposal includes potentially selling the 65-acre Paramount lot in Hollywood — as well as the larger Warner Bros. campus in Burbank, should Paramount prevail in the merger battle. Such sales would generate revenue to help pay merger costs, one of the knowledgeable sources said.

Paramount’s sudden relocation plan has further rattled Hollywood, which already is reeling from thousands of job losses in recent years.

Bonta, in a statement Tuesday, blasted Paramount’s latest strategy, calling it “another attempt to blackmail the state into letting an illegal deal through.”

“Paramount has lost the plot as it continues to lose in court,” Bonta said. “My office remains committed to stopping illegal consolidation and protecting a vibrant California economy for businesses that play by the rules.”

Behind Paramount’s pivot is a desperate scramble to bolster its legal case and muster funds to help finance a deal Warner shareholders approved in April.

Paramount offered to pay Warner investors $31 a share as well as so-called “ticking fees” of 25 cents per share for every quarter after Sept. 30 until the transaction closes.

That sweetener was intended as a show of confidence that Paramount’s deal would sail through its regulatory reviews, unlike a Netflix acquisition that faced more regulatory scrutiny. Netflix subsequently dropped its bid.

Paramount was banking on the swift approval of the U.S. Department of Justice, which arrived in June. President Trump is friendly with the Ellison family, and he has been eager for a shakeup at CNN, one of Warner’s properties.

“Ellison thought he had an ace in the hole with Trump [and] the DOJ, but it backfired on him because the clearance was so obviously rubber-stamping,” London-based media analyst Alice Enders said. “Now, the issues have resurfaced and it’s a costly potential delay.”

The ticking fees could add $7 million a day — or $650 million a quarter — to the $81 billion that Paramount had already anticipated paying Warner shareholders. (Paramount also agreed to absorb about $30 billion of Warner Bros. debt left over from last merger, in 2022.)

Ellison has repeatedly defended his proposed purchase, saying the tie-up does not threaten competition because Hollywood has been transformed by Netflix and other deep-pocketed tech giants.

Already, Paramount has received clearances from 65 foreign regulators, including Britain and the European Commission.

To accelerate California approvals, Paramount requested a November trial date for Bonta’s suit. Instead, U.S. District Judge Araceli Martínez-Olguín scheduled a March 2 trial — dealing another blow to Paramount.

Ticking fees alone could add $2.1 billion to the cost of buying Warner Bros. In addition, Paramount said that delaying the transaction until next spring will add $190 million in bridge loan financing costs.

Paramount disclosed that it had $1.6 billion in cash on hand and a revolving loan of $3.2 billion available for its use.

If the deal fails to close by June 4, Paramount would have to pay Warner Bros. a $7-billion breakup fee. That’s when Warner’s board could pull the plug on the Paramount deal.

Puck News first reported Ellison’s latest plan to quickly move Paramount’s operations as soon as October.

“This is a plan — not a threat,” said a person who was in the room when Ellison discussed his plans but who was not authorized to comment.

The relocation campaign echoes a tactic employed by software giant Oracle Corp., co-founded by Ellison’s billionaire father, Larry Ellison.

Oracle was based in Redwood City for three decades, but in late 2020, the company moved its headquarters to Austin, Texas, joining other California tech firms leaving in protest of the state’s high taxes and steep cost of living.

Then, two years ago, the elder Ellison announced that Nashville would host Oracle’s new headquarters. At the time, Oracle saw that state’s healthcare industry as a promising growth business. Oracle since has bet heavily on artificial intelligence.

In contrast, it would be difficult for Paramount to pack up its operations because it depends on producers, directors, writers and stars to make its TV shows and movies. The two studio lots also boast dozens of soundstages; century-old fortresses that would not be easily duplicated. And many Paramount executives are not eager to leave Los Angeles.

Some observers questioned Paramount’s willingness to carry out a move, which surfaced a week after David Ellison’s guest essay in the New York Times, which described his love of Hollywood and movies ever since he was a boy.

Ellison believes the proposed Warner merger is the best way to save Hollywood, saying the combination of two storied studios would strengthen not harm the film industry.

“One moment he’s promising to reinvigorate theatrical releases. The next he’s talking about uprooting two historic companies and moving them 2,000 miles away in order to avoid a lawsuit,” said Gabriel Kahn, journalism professor at USC Annenberg School for Communication.

Paramount’s corporate headquarters are in New York but after the Ellison family’s acquisition last year, the center of gravity shifted west. Ellison and other top executives live in Los Angeles.

Another corporate move wouldn’t disrupt Bonta’s lawsuit, experts say.

Instead, they suggested Paramount’s flurry of recent activities — including winning the support of two large theater chains, AMC and Regal, with promises of a robust movie pipeline post-merger — appeared to be part of a public relations and pressure campaign.

“They lost a lot of leverage now that the trial is set for March,” said Abiel Garcia, a former prosecutor and partner at the Manhattan Beach firm Kesselman Brantly Stockinger.

“And when you don’t have leverage in court, you go the political route,” he said, adding that Paramount seems to be angling for Gov. Gavin Newsom to join the fight.

Newsom, who has presidential ambitions, has been sensitive to the flight of companies from California. However, he has avoided picking a side in the messy merger squabble.

What’s more, the governor lacks authority to intervene in the lawsuit brought by Bonta and 11 other state attorneys general.

“All I know is that if I was governor, I wouldn’t want to lose Hollywood from this state, I wouldn’t want to lose a major company like Paramount to another state,” Paramount Chief Legal Officer Makan Delrahim said late Tuesday at a Politico Live conference in Sacramento. He had been asked about the stances of Newsom and his potential successor, Xavier Becerra, the Democratic gubernatorial nominee.

“I hope it settles before court,” Becerra said at the conference. “It is easier to stand in a conference room and settle than it is to stand in a courtroom.”

Delaying the trial until March has been “devastating,” Delrahim said, adding that Paramount proposed settlement terms on May 19 — but the state attorneys general instead moved forward with their suit.

“It’s costing jobs. It’s costing a lot of uncertainty for a lot of our employees, for Warner Bros. employees,” Delrahim said.

Still, Garcia and others expressed doubts about Paramount’s full-court press.

“It just feels a little over the top. It feels like a PR blitz,” Garcia said. “It suggests to me that they think their case is weaker than I even thought.”

Paramount Skydance has notched a needed win as it continues to pursue its $111-billion deal to buy Warner Bros. Discovery.

On Wednesday, the European Commission gave its consent, allowing tech scion David Ellison’s industry-reshaping merger to move forward in the countries that make up the European Union.

Europe joins 64 other regulatory entities that have either approved the deal or chosen not to challenge it, Paramount said in a statement.

“These clearances recognize that the combination of Paramount and WBD will enhance consumer choice and enable a creative-first company to invest in more projects and bring stories to audiences worldwide,” Paramount said. “It will create a scaled media and entertainment company capable of competing with the tech companies that have come to dominate the industry.”

European regulators added just one condition: Paramount must end a partnership with Universal Pictures to share distribution of movies in Europe. Beyond that, regulators concluded that even with the proposed Paramount-Warner consolidation there were enough producers to avoid competitive harms.

“The Commission found that, at film production level, enough film studios remain as competitors,” the European Commission said in a statement. “These include other major US studios like Disney, NBC Universal … and Sony, along with smaller US studios such as Amazon MGM, A24 and Lionsgate, as well as European studios.”

But the merger would result in a “high concentration” of film distribution, the commission said, so Paramount would have 13 months to end its joint venture, United International Pictures, which distributes Paramount and Universal films to cinema owners in Europe.

Paramount must not “directly or indirectly … enter into any agreement or understanding with Universal to jointly co-distribute films” in the European countries for 10 years, the commission said.

Despite early concerns about potential dominance in the children’s television market, Paramount will not be required to divest Cartoon Network, a Warner asset, because of its ownership of Nickelodeon.

“The Commission found that streaming platforms offering children’s content will continue to act as a competitive constraint on the merged entity’s TV channels,” the agency said.

The European Commission joins regulators in Australia, Brazil, Canada, China, Saudi Arabia, Serbia and South Africa that have found the deal would not crush competition in their respective markets. Britain’s Competition and Markets Authority is still investigating the merger’s impacts.

Paramount secured the approval of the U.S. Justice Department last month. The company was hoping to close its blockbuster acquisition of Warner Bros., which owns HBO, CNN and the Burbank studios behind such popular characters as Batman, Superman, Harry Potter, Scooby-Doo, by the end of September to avoid a larger payout to Warner Bros. Discovery shareholders.

The European Commission’s approval came two days after Ellison’s firm was dealt a substantial setback.

A federal judge in Oakland on Monday issued a temporary restraining order preventing Paramount from finalizing the acquisition for at least 14 days as that antitrust case heats up. The decision came after 12 state attorneys general, led by California Atty. Gen. Rob Bonta, filed a lawsuit last week alleging the merger would violate U.S. antitrust rules.

District Judge Araceli Martínez-Olguín scheduled an Aug. 3 hearing to determine whether a longer-term pause is warranted. The states are expected to seek a preliminary injunction, which would tie up Paramount’s merger for months.

Paramount, in its statement, noted the European Commission’s conclusions “directly refute key assumptions that underpin the state AGs’ complaint seeking to block the transaction,” including whether big-budget or blockbuster films should be considered a market.

Wednesday’s approval “marks another significant milestone in bringing Paramount and Warner Bros. Discovery together,” Makan Delrahim, Paramount’s chief legal officer said in the statement. “We appreciate the Commission’s constructive engagement and thorough analysis throughout its review.”

Deal critic Alvaro Bedoya, a former Federal Trade Commission member who is now a senior adviser at the American Economic Liberties Project, offered a conflicting view.

“This is not remotely over. The United States is not Europe,” Bedoya said in a statement.

The Writers Guild of America joined the legal fray last week by filing its own antitrust complaint against Paramount, alleging the proposed union of two of Hollywood’s biggest studios would lead to fewer jobs and lower pay for writers. The WGA is also seeking an injunction.

The 37-page lawsuit filed by the state attorneys general alleges that Paramount’s proposed takeover — the largest Hollywood deal in decades — would violate the U.S. Clayton Antitrust Act, a century-old law to prevent mergers that weaken competition and raise costs for consumers.

In her order granting the states’ request for a temporary restraining order, Martínez-Olguín wrote: “The Transaction would also be difficult, if not impossible, to unwind if permitted to proceed given the anticipated consolidation of operations, sharing of business-sensitive information, and potential termination or reassignment of employees.”

Paramount faces a potential $7 billion payment to Warner Bros. should the company fail to close the transaction by next summer.

Is Paramount making a Tony Soprano move?

David Ellison’s media company appears to be girding for a big battle with California Atty. Gen. Rob Bonta and fellow state attorneys general who may team up to file a lawsuit aiming to block Paramount’s proposed $111-billion takeover of Warner Bros. Discovery.

Last week, Paramount hired powerhouse antitrust attorney Jeffrey Kessler to help defend its proposed takeover of Warner, which owns CNN, TBS, HBO and the prestigious Burbank film and television studios.

Kessler — co-executive chairman of Winston & Strawn in New York — is one of the nation’s top antitrust lawyers. He most recently led the state attorneys’ case against concert promoter and ticketing firm Live Nation, resulting in a monumental win for the states, including California.

Now Kessler may be on the opposite side, potentially going after the government to help Paramount build a behemoth that would include CNN and CBS News, two historic film studios and four streaming services.

The states have not indicated whether they plan to go to court to block Paramount’s takeover of Warner, but Bonta has said Ellison’s proposed consolidation, which is widely expected to lead to layoffs, is problematic.

Paramount declined Tuesday to discuss Kessler’s remit. Kessler was not immediately available for comment.

Hiring an attorney who is more commonly aligned against big companies prompted at least one observer to postulate that Paramount could be angling to remove a big name from the legal chessboard to prevent him from joining the other side, in the vein of TV mob boss Tony Soprano.

During the HBO show’s fifth season, Soprano spent months consulting with top divorce attorneys, creating a potential conflict of interest that prevented those lawyers from representing his wife Carmela in the dispute.

Attorney Jeffrey Kessler arrives at federal court in Oakland in a file photo.

(Noah Berger/Associated Press)

Kessler also knows the ins and outs of a courtroom as well as antitrust settlements, which could benefit Paramount as it seeks to avoid a bruising court challenge.

More than 5,000 artists and other entertainment industry workers already have signed an open letter that urges Bonta to take action to upend the Paramount and Warner Bros. deal.

Ellison and his team have vowed to make $6 billion in cuts following the merger. The combined company would have to contend with $79 billion in deal debt.

Adding Kessler comes as state attorneys general have been taking a more aggressive role in waging anti-trust fights. Many believe the U.S. Justice Department has been sitting on the sidelines to allow deals favored by President Trump to sail through their legally mandated regulatory reviews.

Trump favors Paramount’s takeover of CNN and other Warner properties.

Paramount Chief Legal Officer Makan Delrahim has made several savvy tactical moves since joining Ellison’s Melrose Avenue firm last fall.

Delrahim, who was Trump’s antitrust chief during his first term, filed paperwork to win the U.S. Justice Department’s blessing in December — soon after Netflix had clinched the bidding war for Warner Bros.

Netflix ultimately bowed out of the auction in late February. And Delrahim’s move gave Ellison’s Paramount a head start in the regulatory approval process.

The company is waiting for confirmation that the Justice Department will consent to its Warner Bros. purchase. It is separately responding to issues raised by regulators in Europe.

It’s not clear when Bonta or his fellow attorneys general might decide whether to bring a case against Paramount, although the deadline is approaching because Ellison wants to get his deal wrapped up by September.

Attorneys general also could opt for negotiating a settlement agreement with Paramount, which might be willing to bend to concessions to get the deal approved.

Bonta is leading a challenge against another big merger — TV station owner Nexstar Media Group’s $6.2-billion purchase of rival company Tegna Inc. Nexstar owns KTLA-TV Channel 5 in Los Angeles and more than 100 other stations.

Nexstar initially argued that Bonta’s action came too late — after Nexstar had gained its federal approvals for the deal. Nexstar also was in the process of consolidating Tegna’s operations and top Tegna executives had cashed out.

The move backfired on Nexstar as a federal judge in Northern California issued a preliminary injunction, ordering Nexstar to halt the Tegna consolidation.

U.S. District Judge Troy Nunley ruled Tegna must be managed as a separate company pending the outcome of a trial.

On Tuesday, Tegna announced that it hired a former Fox TV station executive, Patrick Paolini, as its chief executive. Beginning next week, Paolini will be responsible for “Tegna’s daily operations, revenue-generating business strategies, local journalism and production, and growth initiatives,” according to a corporate statement.

Paolini will report to Tegna’s board — not Nexstar.