Warner

California Atty. Gen. Rob Bonta made it clear Tuesday he holds the power to extract major concessions in the battle over the proposed Paramount-Warner Bros. merger.

A day after canceling settlement talks, Bonta said he remains open to meeting with Paramount Skydance executives to find remedies to resolve the antitrust lawsuit stalling David Ellison’s $111-billion takeover, but called on the company to end its “amateur hour” conduct.

“If you want to have an adult, legitimate, serious settlement discussion — no problem,” Bonta said during an appearance in Los Angeles. “But if you want to play games, we’ve got better things to do.”

The attorney general, who is leading the coalition of 12 states that filed an antitrust lawsuit to block the merger, repeated his stance that Paramount must make significant concessions to end the court battle — such as selling cable television channels. However, Ellison has been resistant because his company will need the steady cash-flow from Warner’s basic cable channels, including TBS, TNT and CNN, to make payments on $80-billion in debt Paramount will take on to finance the industry-reshaping deal.

Ellison’s promise to release 30 movies a year, following the merger, won’t cut it, the attorney general said.

Bonta, who was speaking at press conference to highlight public safety, expressed frustration with Paramount afterweeks of drama.

Paramount first threatened to leave California if Bonta continues to wage his court battle. Then, on Friday, Paramount accused actor Mark Ruffalo (a staunch deal critic) of making antisemitic comments, prompting prominent Jewish organizations to join the fray. One Jewish leader suggested Bonta was in cahoots with Ruffalo.

That wasn’t the issue, Bonta said, specifically pointing to leaks about the settlement talks that appeared in various news outlets.

Some reports suggested Bonta’s office sought the negotiations amid withering political pressure. Gov. Gavin Newsom, Los Angeles Mayor Karen Bass and Xavier Becerra, the Democratic nominee for governor, have separately urged a settlement to end the antitrust fight.

Bonta set the record straight: “Paramount reached out to us to have settlement discussions,” he said. “They asked for them.”

Bonta’s beef was that the substance of the nascent negotiations appeared in newspaper articles despite both sides agreeing to hold confidential talks, Bonta said, adding that crossed the line. The Wall Street Journal reported that California’s top prosecutor planned to ask Paramount for agreements to keep Warner Bros. and the Paramount Pictures film studios separate units as well as an agreement to sell some cable channels.

“We thought they were reaching out to us in good faith … unfortunately, they violated the rules of engagement,” Bonta said. “They leaked lies to the press while we were in settlement negotiations. That’s not okay … That is amateur hour.”

Paramount declined to comment. On Monday, Paramount denied it was the source of the leaks.

Bonta’s comments appeared as a show of strength after major court wins.

The coalition of attorneys general, who also represent New York, New Mexico, Colorado, Nevada and Oregon, last month won a temporary restraining order that blocked Paramount from closing the deal. Rather than lose in a hearing over a more consequential preliminary injunction, Paramount voluntarily agreed that it would not finalize the transaction until after the trial or by June 1, whichever date comes first.

U.S. District Court Judge Araceli Martínez-Olguín set a March 2 trial, which was in line with the plaintiff states’ request. Paramount had lobbied for a November date.

“We are winning in this lawsuit,” Bonta said. “They have eight of the biggest law firms in the country, making every imaginable argument under the sun. And they lost, the judge said: ‘You are likely to lose this case’… the states are likely to succeed on the merits.”

For now, no new settlement talks are scheduled.

Bonta expressed an openness to finding a truce.

“If they are willing to clean things up, put a lid on their lying leaks and engage in a way that is sincere and in good faith, we will be where we always are … happy to meet,” Bonta said.

Staff writer Kevin Rector contributed to this report.

David Ellison’s Paramount Skydance has asked a judge to force California Atty. Gen. Rob Bonta and his coalition of 11 other states to prepare to set aside as much as $1.9 billion as the Warner Bros. Discovery merger challenge heads into overtime.

In Monday’s court filing, Paramount requested the plaintiff states, including New York, Colorado, Oregon and Nevada, as well as the Writers Guild of America, post a bond that would cover the “ticking fees” Paramount promised to pay Warner shareholders should the deal stretch beyond its anticipated September close.

Ellison was confident his proposed Warner takeover would sail through its regulatory clearances. President Trump’s Justice Department approved the merger in June, as have dozens of other countries.

The states would not be required to pay the full $1.9 billion upfront. Instead, they would have to come up with a portion of that amount by Sept. 30. Should the Democrat state attorneys general and WGA lose their lawsuits, they would ultimately have to pay the full amount.

Monday’s court filing highlights Ellison’s frustrations and the financial pressures that deal delays will bring the media company. The filing also continues Paramount’s full-court political pressure campaign to get Bonta and the other states to abandon their antitrust lawsuit.

Paramount did not expect such a spirited challenge from Bonta and the 11 other Democratic state attorneys general who banded together with the WGA to try to block the $111-billion merger of two historic Hollywood studios.

Paramount’s 23-page filing, signed by former high profiile federal prosecutor Danielle Sassoon, was intended to rattle the states.

Paramount is trying to create divisions among the plaintiff states by prompting them to question their resolve in fighting a protracted and potentially expensive legal battle, according to a person familiar with Paramount’s strategy who was not authorized to speak publicly.

Because WGA has separately sued to unravel the deal, Paramount has asked the judge to have the union post a bond to cover some of the costs, too.

In its motion, Paramount cited the Clayton Antitrust Act, which is the foundation for Bonta’s lawsuit. The law carries a provision to require plaintiffs to post a bond to cover the potential financial harms of halting a transaction.

The bond gives a defendant, in this case Paramount, a way to recover lost funds should they ultimately prevail in court.

U.S. District Judge Araceli Martínez-Olguín will be asked to rule on the request during a Wednesday court hearing.

“We have satisfied all closing conditions under our merger agreement, having received regulatory clearances from 68 jurisdictions,” Paramount said in a statement. “These two lawsuits are the only barrier to closing this transaction.”

Paramount is incurring considerable legal fees and deal-related costs.

The company cited a potential eight-month merger delay because Martínez-Olguín scheduled the trial for March 2. If the case goes to trial, it might not be decided until next May.

At issue are the “ticking fees” that Paramount in February agreed pay to Warner investors should the merger be delayed . Paramount agreed to pay $.25 a share for every quarter until the acquisition finalizes.

The fees add up to $7 million a day, or $650 million per quarter.

Paramount is facing a June 4 deadline to close the deal. That’s when Warner Bros. Discovery can demand a $7-billion break-up fee.

Paramount wants to get the deal done as soon as possible, and with the approval of Mexican regulators last week, only Bonta and the states’ lawsuit stands in their way.

Paramount also is cognizant of shifting winds in Washington should Democrats regain control of Congress in November, which could bring fresh scrutiny to the merger .

Ticking fees weren’t the only costs of the extended timeline.

“There will be no integration and no ramped-up investment in content, production, and creative talent by the combined company,” Paramount said . “Employees of both Paramount and WBD are also harmed by the uncertainties caused by the delay.”

Last week, the Directors Guild of America and the International Alliance of Theatrical Stage Employees — which represent a combined 200,000 union members — waded into the clash over the merger, which continues to carve deep divisions throughout the industry.

“We remain confident that plaintiffs’ case is without merit and will defend our pro-competitive transaction in court,” Paramount said. “We look forward to closing this transaction and delivering its benefits to consumers and entertainment industry workers in California, the United States and around the world.”

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.”