Representatives for Paramount and the State of California are set to meet on Monday to discuss a potential path for settling the state’s lawsuit that seeks to halt Paramount’s acquisition of Warner Bros. Discovery, four people briefed on the upcoming discussions said.
The talks are preliminary, and there is no assurance that they will lead to meaningful negotiations toward a settlement, said the people, who spoke on condition of anonymity because the discussions were private. Paramount requested the meeting, two of the people said.
Paramount’s merger with Warner Bros. would create a media powerhouse combining two major movie studios, multiple streaming services and the news outlets CNN and CBS News.
Last month, California led 12 state attorneys general in suing to block the deal, arguing it would create a media company with outsize market power in cable television and studios.
The meeting, which will include senior executives and lawyers from each side, has been in the works for a little over a week, said one of the people. It remains unclear what resolution Paramount might offer that would satisfy the attorneys general. Paramount declined to comment for this article.
California’s attorney general, Robert Bonta, has said he would be wiling to accept only structural remedies to resolve the lawsuit, which typically means selling off pieces of a business. Executives are often reluctant to hive off parts of a newly merged company because they have already made financial assumptions about the combined operations.
Paramount’s advisers have been evaluating possible solutions, one of the people said. Any solution would likely have to address at least one of two key concerns the states have: the size of Paramount’s cable business and the size of its movie studio businesses relative to their overall industries. A number of theater chains have come out in support of the deal in recent weeks.
“If the opposing party in litigation wants to meet in good faith to make a sincere effort to resolve the case, we’ll meet,” Mr. Bonta said Friday in a statement, adding that Paramount would need to make concessions to address the states’ concerns in any potential discussions. Variety earlier reported to the sides were planning to meet Monday.
With a trial scheduled for March, the delay could cost the company hundreds of millions of dollars in fees that the company must start paying to Warner Brothers if the deal is not closed by October. Paramount has agreed to pause the deal until June if the case has not been resolved by then.
The lawsuit has also delayed the cost savings that Paramount had been eyeing from the deal, while also creating great uncertainty for both companies, as well as the broader entertainment industry.
Concerns about the delay’s impact is contributing to mounting pressure for the two sides to come to a resolution. On Thursday, Mayor Karen Bass issued a release saying she was calling for “a swift and urgent resolution” to the litigation. She said the statement came on the heels of a meeting with labor leaders in the entertainment industry and members of the Mayor’s Entertainment Industry Council.
“Productions in LA are hurting and hard-working Angelenos are out of a job because ongoing disputes over the proposed merger have stalled filming in our city — it’s time for all parties to come to the table,” the mayor said in the release.
The Writers Guild Association, which has also sued to halt the acquisition, denounced Ms. Bass’s statement, saying it was “disappointed” that the mayor has chosen to “join Paramount’s pressure campaign” to settle the dispute.
David McCabe contributed reporting.
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