Paramount has warned of October 1 relocation if settlement fails

Paramount is in advanced settlement talks with California Attorney General Rob Bonta aimed at resolving the antitrust lawsuit that stands in the way of the company’s $81 billion deal to acquire rival Warner Bros. Discovery, according to people familiar with the matter. The Wall Street Journal reported the talks on September 18, noting they remain ongoing and that there is no guarantee an agreement will be reached.

A coalition of a dozen Democratic-led states, led by Bonta, sued in July to block the deal on antitrust grounds. The states argued that the combination of Paramount and Warner would create too much concentration in the markets for theatrical films and cable television channels. The transaction, if completed, would unite two of the movie business’ oldest studios, two major streaming services in Paramount+ and HBO Max, and dozens of television networks.

The parties have discussed compromises including Paramount agreeing to operate the two companies’ movie studios separately for a period rather than immediately combining them, the people familiar with the matter said.

The combined entity would give Paramount Chief Executive David Ellison control of franchises including DC superheroes and Harry Potter. The merged portfolio would add CNN, Cartoon Network and Food Network to a lineup that already includes MTV, Comedy Central and the CBS broadcast network.

Paramount has warned that it is prepared to move the company out of California if it cannot reach a deal with the states, with a potential relocation starting as soon as October 1. Tennessee is seen as the likely destination for Paramount.

Separately, the agreement with Warner includes a “ticking fee” with payments to Warner shareholders of roughly $650 million per quarter, or $7 million per day, beginning next month and continuing until the transaction closes.

Paramount has asked a federal judge to require the states and the Writers Guild to put up a nearly $1.9 billion bond for challenging the acquisition. Money from such a bond would go to the company if it ultimately wins the case. A hearing on that matter is scheduled for next week.