Paramount-Warner Bros merger talks hit setback as California AG cancels meeting

California: California Attorney General Rob Bonta cancelled a meeting with Paramount Skydance representatives scheduled for Monday to begin settlement talks over the state’s lawsuit seeking to block Paramount’s proposed $110 billion acquisition of Warner Bros Discovery, his office said. Paramount has pushed for a settlement in the case, which is the last hurdle to the deal along with a parallel lawsuit by the Writers Guild of America. According to a Reuters report, the company faces significant fees and costs to keep the deal together if the lawsuit proceeds to a trial scheduled for March.

Bonta’s office said the meeting was called off after the attorney general accused Paramount of leaking details of a meeting held on Friday and misrepresenting what was discussed. Paramount has denied being responsible for the leaks.

The cancellation puts a fresh wrinkle in efforts to resolve the case, which represents the final major obstacle to Paramount’s proposed takeover, alongside a parallel lawsuit filed by the Writers Guild of America.

Bonta said his office had met Paramount on Friday but alleged that details of the settlement discussions were subsequently leaked. He accused the company of acting in bad faith and said California would be willing to resume talks if Paramount engaged more sincerely.

Paramount has rejected the allegation, saying it shares concerns about the public discussion and reporting surrounding the proposed deal. The company has maintained that it was not the source of confidential information from its discussions with the attorney general’s office.

The stakes are high for Paramount. If the lawsuit proceeds to a trial scheduled for March, the company faces significant additional fees and costs as it works to keep the proposed transaction on track. California and its partner states have also secured key rulings in the case, strengthening their position in any further settlement negotiations.

Bonta has previously indicated that he is open to settling legal disputes, but has also signalled a preference for structural remedies over promises by companies to change their behaviour. Such remedies could involve selling parts of a business rather than relying solely on commitments about future conduct.

That could complicate Paramount’s push for a settlement. The Wall Street Journal reported on Sunday that Bonta was expected to seek the divestiture of some cable channels and commitments to keep Paramount’s movie studio separate from Warner Bros before approving the merger.

Paramount Skydance chief executive David Ellison has already promised to release 30 films a year and keep them exclusively in cinemas for 45 days. California and 11 other states filed their lawsuit on July 13, arguing that the proposed deal would create a media giant with enough market power to raise prices across film and television.

For now, the settlement channel has gone quiet. Whether Paramount and California return to the negotiating table could determine whether the $110 billion deal moves towards completion or heads for a courtroom showdown.