Paramount Tries to Isolate AG Bonta in Warner Merger Battle
Paramount Skydance is employing a strategy to pressure California Attorney General Rob Bonta over its Warner Bros. Discovery merger, leveraging political allies and the threat of relocating jobs.
Paramount Skydance is reportedly working to undermine California Attorney General Rob Bonta’s challenge to its merger with Warner Bros. Discovery by seeking to politically isolate him. The strategy involves enlisting the support of California politicians, including Los Angeles Mayor Karen Bass, to pressure Bonta into a settlement.
Sources close to the media company suggest the plan is to "isolate Bonta in the state and in his own party." The argument is that many Democratic politicians in California are eager for a settlement and are concerned that Paramount CEO David Ellison might relocate the company. Furthermore, some view Bonta's antitrust case against the $81 billion deal as weak, believing that neither Paramount nor Warner Bros. Discovery are dominant enough to form a monopoly.
Ellison has previously stated he would consider leaving California if a satisfactory settlement is not reached by October 1, a move that could result in the loss of thousands of jobs and billions in economic activity. Mayor Karen Bass has publicly acknowledged these concerns, stating her commitment to engaging with Paramount and the Attorney General's office to retain jobs in Los Angeles.
"I will continue to engage with Paramount, Attorney General Bonta, and entertainment leaders to keep jobs in LA," Bass wrote on X. "This industry was built here. Its workers are here. I’m going to fight like hell to keep it here."
Reports of Ellison's potential departure have highlighted that he has made his intentions clear regarding settlement talks. Paramount, with the backing of Ellison's father Larry Ellison and legal counsel Makan Delrahim, is reportedly counting on the concerns of Governor Gavin Newsom and potentially Xavier Becerra regarding job losses to influence Bonta.
A leaked report indicated that California could lose over 50,000 jobs and $2.1 billion annually if Paramount relocates from its Los Angeles lot, with Nashville and Austin, Texas, cited as potential alternative locations offering a more favorable regulatory environment.
Paramount anticipates that other prominent Democrats, including Bass, will amplify calls for Bonta to reconsider his stance as the October 1 deadline approaches. "These guys (at Paramount) are formidable and they have the entire state Dem establishment from Bass to Newsom to Becerra asking Bonta ‘what are you doing?’" one insider commented. "My guess this gets settled with some employment guarantees that appeases Bonta."
While representatives for Newsom and Becerra did not immediately comment, a spokeswoman for Paramount Skydance declined to comment. Bonta's office issued a statement acknowledging Paramount's threat to leave the state, asserting that "What Paramount decides to do is Paramount’s choice alone. We’ll continue to apply the law without fear or favor and continue to be open to coming to the table for good faith discussions."
The core issue remains whether Bonta is open to a settlement. He has demanded significant structural changes to the merger, which Ellison has deemed unacceptable. Bonta has also gained support from other attorneys general, including New York's Tish James.
Bonta, described as a far-left Democrat, is reportedly considering a run for governor, and his lawsuit has garnered support from progressive factions, including actors like Mark Ruffalo, who have voiced concerns about potential job losses and reduced competition resulting from the merger.
Paramount and Warner Bros. Discovery argue that merging is crucial for competitiveness against streaming giants like Netflix. The deal has already received approval from U.S. antitrust authorities and most international regulators.
A federal judge has mandated settlement talks between the parties by mid-October. However, there is no certainty that these discussions will compel Bonta to abandon his demand for structural changes. If the case proceeds to trial, it could jeopardize the deal and incur substantial costs for Paramount Skydance, which faces a daily "ticking fee" until the transaction closes. Should Bonta succeed in blocking the deal, or if the Ellisons withdraw, Paramount would be liable for a $7 billion breakup fee to Warner Bros. Discovery.