California Attorney General Rob Bonta has expressed a willingness to resume negotiations regarding Paramount’s proposed merger with Warner Bros. Discovery, but only if Paramount Skydance addresses ongoing leaks and misrepresentations related to the discussions. In an exclusive interview with TheWrap, Bonta stated that the ball is in Paramount’s court to rectify these issues before talks can proceed.

Bonta’s comments follow the abrupt cancellation of a scheduled mediation session with Paramount. He emphasized that the company must identify and eliminate the sources of leaks that have reportedly misrepresented the negotiations. “They’ve got to figure out where the leaks are and shut them down,” he said, indicating that discussions could resume once these concerns are addressed.

Ongoing Tensions

The cancellation of the mediation session adds another layer to the complex saga surrounding Paramount’s attempt to acquire Warner Bros. Discovery. A recent report from The Wall Street Journal revealed details of preliminary discussions between the two companies, which Bonta found unacceptable. He accused Paramount of not only leaking information but also misrepresenting it to the press, calling their actions “completely inappropriate.”

In response, Paramount denied any wrongdoing, asserting that it shares Bonta’s concerns about the public discourse surrounding the merger and remains “hopeful” for good faith discussions. However, Bonta remains skeptical, stating that the responsibility for the current situation lies with Paramount.

Financial Pressures and Legal Challenges

Bonta’s remarks come as the state attorney generals, the Writers’ Guild of America, and Paramount are set to face trial in March, increasing financial pressure on the media company. Starting October 1, Paramount CEO David Ellison will incur a 25 cent-per-share ticking fee, amounting to approximately $650 million per quarter until the deal is finalized. If the merger fails due to regulatory issues, Paramount could face a $7 billion breakup fee.

Paramount is seeking a $1.9 billion bond from the states and WGA to cover these costs, a request that will be addressed in a hearing on September 24. Bonta has pointed out that Paramount voluntarily agreed to the terms leading to these fees, suggesting that the company is now attempting to shift responsibility.

Settlement Prospects

When discussing potential settlement options, Bonta reiterated that the state AGs are not interested in behavioral remedies proposed by Paramount, such as a commitment to 30 theatrical film releases annually. Instead, he indicated that a structural remedy would be necessary, which could involve separate ownership of a significant portion of the basic cable channels included in the merger.

Bonta’s stance reflects a broader concern about the merger’s implications for competition and job security in the industry. A recent study indicated that the merger could lead to the loss of nearly 4,500 film and TV jobs in Los Angeles County alone, with significant economic repercussions.

As the situation unfolds, Bonta remains firm in his position, emphasizing that the lawsuit is fundamentally about preventing monopolistic practices and ensuring a fair market. He has also dismissed threats from Ellison to relocate Paramount’s operations, labeling them as “blackmail” and asserting that accountability will remain regardless of the company’s decisions.