California Attorney General Rob Bonta's lawsuit to block the $81 billion merger between Paramount and Warner Bros. Discovery could jeopardize a significant source of campaign funds for the state's Democratic Party, according to sources.
The legal challenge, filed by Bonta and other progressive attorneys general, has drawn criticism from media and entertainment executives, many of whom are major donors to Democratic causes. These executives, primarily based in Hollywood, are reportedly urging Bonta to reach a settlement with Paramount Skydance chief David Ellison.
The concern among these moguls stems from a perceived threat to the consolidation needed for the survival of the media industry. They argue that in an era of declining traditional revenue streams from cable bundles and movie theaters, and the rise of tech giants like Amazon and Apple entering the entertainment space, mergers are essential for companies to remain competitive. The combination of Paramount and Warner Bros. Discovery is seen as a test case for this survival strategy.
Sources suggest that while many media industry workers are reliably Democratic voters, the substantial financial contributions that fuel campaigns, both in California and nationally, come from the top leadership. These executives, described as being comfortable with centrist Democratic figures like Bill and Hillary Clinton or Barack Obama, are reportedly growing wary of what they perceive as the party's increasingly far-left orientation. Issues such as California's homelessness crisis and the governance of cities like Los Angeles are also cited as points of concern.
The executives' legal counsel reportedly sees no merit in Bonta's claims that the merger would harm consumers or that blocking it would preserve jobs. Instead, they believe Bonta is pursuing the lawsuit for political gain, aiming to raise his profile among the state's progressive wing and potentially criticize figures like former President Donald Trump due to Larry Ellison's (David Ellison's father) past association with him. The lawsuit's stance has been described as being to the left of regulatory bodies in the European Union and the UK.
This pressure has reportedly led California Governor Gavin Newsom and Attorney General Xavier Becerra, a potential successor to Bonta, to call for settlement talks. There are also concerns that David Ellison might relocate Paramount out of California if the state does not become more amenable to the deal, a move that could impact the state's economy, which relies on the industry for an estimated 700,000 jobs and $70 billion in annual tax revenue. The prevailing sentiment in Hollywood is that pressure will ultimately lead to a settlement, though some note that the current Democratic Party differs significantly from its iterations under past centrist leaders.