Paramount Skydance has been in settlement discussions for weeks with California and additional state attorneys general over its proposed $110 billion acquisition of Warner Bros. Discovery, according to people familiar with the talks. One person said the negotiations have moved forward in recent days and a deal might come together within days, while stressing discussions are still in progress. Any resolution would likely require support from all 12 Democratic states involved and the Writers Guild, which has its own lawsuit challenging the deal.
According to The Wall Street Journal, the company has reached an advanced stage of discussions with California officials to settle the litigation. Reuters added that an agreement could come this weekend or Monday. In after-hours trading, Paramount shares were up as much as 8.7% and Warner Bros. Discovery rose 8.6%.
Paramount has offered behavioral concessions, including pledges to release 30 films in theaters annually and to ramp up TV production. California Attorney General Rob Bonta has pushed back on behavioral remedies as difficult to enforce, saying he prefers structural changes such as selling assets. On Bloomberg TV on Thursday, Bonta said a sale of some intellectual property "could be a component" of a settlement.
If the combination closes, well known Warner Bros. franchises like DC Comics, Harry Potter and The Lord of the Rings would join Paramount. Some observers have speculated Paramount could look to unload certain Warner Bros. cable networks, including TBS and CNN, to win over opponents. Paramount has also threatened to leave California if it cannot secure a settlement that permits the deal to proceed.
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A California judge has ordered settlement talks, which are formally set for Oct. 14-15. A trial is not scheduled until March. Paramount faces rising costs if the clock runs out: beginning at the end of this month, it would owe Warner Bros. $7 million in daily late fees without a deal, and a failed transaction would trigger a $7 billion payment to Warner Bros.
A Paramount spokesperson declined to comment. A representative for California Attorney General Rob Bonta stated that any settlement discussions are confidential, and noted that his office "cannot confirm or deny whether settlement talks are occurring or their alleged substance." As Bloomberg Intelligence analyst Geetha Ranganathan wrote Friday, "Paramount has strong reasons to reach a workable compromise."
The shape of any settlement will determine whether this merger closes and how costly it becomes if it does not, which explains the swift stock moves on fresh headlines. Watch the Oct. 14-15 sessions and the chance of weekend or Monday news, either of which could shift expectations for both companies.
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