Paramount and California AG Reportedly Closing in on a Settlement

Paramount and a dozen states led by California attorney general Rob Bonta are closing in on a deal to settle a lawsuit challenging the studio’s bid to acquire Warner Bros. Discovery, The Wall Street Journal reported Friday.

The two sides are in “advanced talks” to resolve the case, per the report. Under the reported deal, terms include “Paramount agreeing to operate the two companies’ movie studios separately for a period rather than immediately combining them.”

Across the litigation, Bonta has maintained he’ll only accept structural remedies, which typically involve companies selling off parts of the combined business, and has previously said such an agreement to run studio operations independently cannot be the primary component of any potential deal. So far, Paramount has only offered behavioral concessions, including a pledge to release at least 30 movies with 45-day theatrical windows.

A deal struck without any divestitures would be a major win for Paramount CEO David Ellison, who’s threatened to move the studio out of California if an agreement isn’t reached by the start of next month regardless of the ultimate outcome of the case. With a settlement, Paramount would be able to close the merger ahead of an Oct. 1 deadline when a so-called $7 million-per-day ticking fee will start to accrue.

The discussions are “ongoing and there is no guarantee that an agreement will be reached,” the story added.

“Potential settlement talks are confidential,” said a spokesperson for Bonta’s office in a statement. “We cannot confirm or deny whether settlement talks are occurring or their alleged substance.”

Paramount declined to comment.

Movement on deal talks have been slow, with leaks having blown up discussions in public jockeying over a potential settlement. Last month, Bonta canceled a meeting with Paramount scheduled for the following day, accusing the studio’s representatives of leaking and misrepresenting details of negotiations they held.

A trial is scheduled to start in March, with Paramount, the states and the Writers Guild of America slated to formally sit down for two consecutive days starting on Oct. 14 to explore a settlement.

A key regulatory approval came on Thursday when the FCC signed off on equity investments from three prominent Middle East sovereign wealth funds that are backing Paramount’s bid. The sovereign wealth funds are collectively providing roughly $24 billion in financing to help bankroll Paramount’s bid for Warner Bros. Discovery, according to SEC filings. Their investment, along with that of others, will result in foreign investors collectively holding 49.5% of the combined company.