California Attorney General Rob Bonta is open to coming to the negotiating table as early as this week, but only if Paramount Skydance agrees to “stop leaking and stop misrepresenting through their leaks” to the press, he said in an exclusive interview with TheWrap on Monday.
Bonta spoke to TheWrap’s Lucas Manfredi and Sharon Waxman after abruptly canceling his scheduled mediation session with Paramount. When asked if talks could restart this week, he said: “It’s up to them.”
He went on: “They’ve got to figure out where the leaks are and shut them down. And once they figure that out, we’ll be happy to talk with them. I don’t know how long it’ll take them to figure it out and to fix it, but when they do, we’re ready.”
The cancellation marked the latest twist in the windy saga of Paramount’s attempted acquisition of Warner Bros. Discovery. The two sides seem to be headed toward talks but a report from The Wall Street Journal on Sunday spilled some of the details of an preliminary conversation between the two sides. And Bonta did not appreciate it.
He accused Paramount not only of leaking the pre-negotiation discussions, but also misrepresenting them. “They’re being cute. They’re playing games. They are purportedly disclosing confidential information from our discussions, but misrepresenting it to the press. That’s completely inappropriate.”
In an earlier statement on Monday, Paramount denied leaking the meeting and said it shares Bonta’s concerns about the “public discussions and misreporting that has surrounded this deal” and remains “hopeful” and is standing “ready to continue good faith discussions.”
While he remains open to “good faith” discussions, Bonta said that specific timing around rescheduled talks depends on Ellison and Paramount.
“All of this is on them. This is another bed of their own making. We were literally ready to talk to them because we assumed, as I think we should, that they were interested in having good faith, sincere settlement negotiations until and unless they prove us wrong,” he said. “They managed to prove us wrong in that assumption with these misrepresenting purported leaks. So that doesn’t work for us.”
A spokesperson for Paramount did not immediately return TheWrap’s request for comment on his latest remarks.
Pressure everywhere
Bonta’s comments came as the state AGs, Writers’ Guild of America and Paramount are headed to trial in March, which puts increasing financial pressure on the media company.
Starting Oct. 1, Ellison will also be on the hook for a 25 cent-per-share ticking fee, which translates to a payout of $650 million per quarter or around $7 million per day until the deal is closed. If the deal is not closed at all due to regulatory matters, Paramount must pay Warner Bros. a $7 billion break-up fee.
Paramount is requesting that the states and WGA put up a $1.9 billion bond to cover the ticking fee and other financing costs during the delay, which will be decided on during a Sept. 24 hearing.
Bonta argued that Paramount voluntarily agreed to delaying the merger and imposed the ticking and breakup fees on themselves. He also noted that Judge Araceli Martinez-Olguin already decided not to impose a bond when the states secured a temporary restraining order.
“They’re a sophisticated party and they didn’t mention the bond once. And now they want a do-over,” Bonta added. “Maybe they could convince her. They’re talented and they’re smart, but I don’t see it.”
At the same time, Bonta is facing his own increasing pressure to reach a settlement from a number of parties, including California Gov. Gavin Newsom, Los Angeles Mayor Karen Bass, the Democratic nominee in California’s gubernatorial race Xavier Becerra, the Directors’ Guild of America and IATSE.
“None of them want this merger as-is. None,” he replied when asked about that pressure. “They all want a ton of conditions, maybe they’re different, and they’re hoping that we can resolve them in settlement because it’s quicker.”
What a settlement looks like
When asked about a potential settlement, Bonta reiterated on Monday that the state AGs are “not interested” in behavioral remedies being offered by Paramount, such as Ellison’s pledge for 30 theatrical film releases a year.
In terms of specific examples of what a structural remedy could look like, Bonta told TheWrap that someone else would have to own a “significant” portion of the 50 basic cable channels that would be included under the combined company, but stopped short of saying CNN would be one of them.
“We have some thoughts on [specific channels]. I’m not going to share those with you. If we do end up ever having productive settlement negotiations, that is something to be discussed,” he added. “But the idea of what it means to have a structural remedy, for example, in the basic cable channel licensing market means separate ownership of a significant number of those channels.”
The Wall Street Journal has also reported that Bonta is interested in keeping the operation of the two companies’ studios separate.
Economic impact
TheWrap exclusively reported a Los Angeles County study which found that the merger could result in nearly 4,500 film and TV jobs lost over the next three years when the two companies combine. It could also put over 5,800 indirect or induced jobs from related small businesses at risk, per the study.
Overall, the economic impact of losing these jobs would be $1.26 billion in wages, $2.78 billion in economic value, $4.06 billion in total business output and $547 million in tax revenue, including $78.6 million in local taxes — most of which (63%) comes from property taxes.
Bonta called the Los Angeles County report an “appropriate reset for some of the misinformation” about the merger.
“The whole point of this lawsuit is that [the merger is] a violation of antitrust law,” Bonta said. “It’s supposed to prevent monopolies from being created and make sure the market is free and fair instead of rigged, that we protect jobs and wages, that prices are fair and that there will be competition, choice and quality.”
But Ellison has also threatened to move Paramount’s operations out of the Golden State if a settlement can’t be reached, a move experts warn could also be “devastating” for the local economy. Bonta once again called the threat “blackmail” and emphasized that no matter where they decide to go, the lawsuit will continue.
“They can’t escape accountability. There’s no reason, based on our lawsuit, for them to go anywhere else unless it was their plan all along before this lawsuit to always go to another state,” he said. “Maybe they think it’s clever, maybe they think it’s helpful to be engaged in the court of public opinion. But as I’ve said time and time again, and I’ll say it now, this is a very straightforward, black and white, bread and butter, meat and potatoes antitrust case about three markets.”
“If there ever is a decision to leave California, that is completely David Ellison’s decision,” Bonta added. “He owns it. It is laid at his feet. He’ll have to explain the 180-degree turnaround from ‘I’m committed to the future of Hollywood’ to ‘now I’m leaving.’”
