Concessions also include CNN editorial board, cable channel sales
The settlement talks are the most advanced since the lawsuit was filed, according to people familiar with the discussions. Beyond the $1.5 billion production investment, the parties have discussed a Paramount commitment not to sell either studio lot and to remain headquartered in California, the people said. Paramount had explored moving out of the state as opposition to the deal mounted.
The negotiations have also considered potential penalties if Paramount fails to deliver on an earlier pledge to produce 30 movies a year after the merger closes. Those penalties could include a requirement that Paramount divest its stake in Miramax, the film company known for titles including “No Country for Old Men” and “Pulp Fiction,” according to people familiar with the matter.
Other measures under exploration include the sale of some cable channels and the creation of a board to ensure CNN retains editorial independence, people with knowledge of the talks said. CNN has been a political flashpoint throughout Paramount CEO David Ellison’s pursuit of Warner Bros. Discovery. Paramount had been discussing the creation of such an editorial board before the states filed suit.
A final agreement has not been reached, and it is unclear what terms the parties may ultimately agree to.
The underlying deal would merge Paramount with Warner Bros. Discovery, bringing HBO, CBS, CNN, streaming services, and storied movie studios under common ownership. Ellison has spent the past year fighting to complete the transaction despite opposition from some political and Hollywood figures.
A coalition of about a dozen Democratic-led states led by California Attorney General Rob Bonta sued in July to block the merger on antitrust grounds, arguing that the combination would create too much market concentration in theatrical films and cable television channels. The Writers Guild of America filed a separate lawsuit contending the deal would eliminate jobs and career opportunities for Hollywood screenwriters.
About two dozen demonstrators gathered in front of the Elihu M. Harris State Office Building in downtown Oakland on Sunday evening to protest the prospect of a settlement, according to the report. Holding signs reading “Bonta Don’t You Dare” and “Block the Megamerger,” they took turns giving speeches urging the attorney general to continue pressing the lawsuit.
“Nothing has changed since he filed the case,” Annie Leonard, co-founder of the non-profit Committee for the First Amendment, said at the gathering. “He needs to stay as strong as he was in filing it.”
The two sides have come under pressure to settle in recent months from Gov. Gavin Newsom, Los Angeles Mayor Karen Bass, gubernatorial candidate Xavier Becerra, major movie theater chains, and some Hollywood labor unions, the report said.
The merger agreement between Paramount and Warner Bros. Discovery includes a “ticking fee” provision under which Paramount would pay Warner shareholders roughly $650 million per quarter — about $7 million per day — beginning next month until the transaction closes. Paramount has separately asked a federal judge to require the states and the Writers Guild to post a nearly $1.9 billion bond for challenging the acquisition, with the money going to Paramount if it ultimately prevails.