California AG cancels Paramount settlment talks over $11B Warner Bros Discovery deal, and he cites ‘a lack of good faith’

California Attorney General Rob Bonta has officially canceled settlement discussions with Paramount regarding the state lawsuit that aims to block the $111 billion acquisition of Warner Bros. Discovery, Variety reported. This move comes after Bonta accused the company of failing to act in good faith during the lead-up to their planned meeting.

The two parties were expected to hold preliminary talks on Monday, August 24, to discuss a potential path forward for the merger. However, Bonta decided to pull the plug on the meeting late Sunday. He cited frustrations regarding how the company handled information from a previous meeting held on Friday.

It is clear that Bonta is not happy with the way this has played out, especially since he has been leading a coalition of 12 states in an effort to stop the deal. This group of states argues that the merger would grant the combined entity an excessive amount of power within the movie production and cable television sectors.

Bonta was quite direct about his decision to walk away from the table for now

“Not only did Paramount leak the alleged substance of settlement discussions, but they misrepresented these discussions, demonstrating a lack of good faith,” Bonta said in a statement. He added, “As soon as Paramount stops playing games and engages sincerely, my office is happy to meet again.”

This development is a significant shift, as many observers viewed the meeting as a potential turning point in the litigation. Bonta has previously stated that he prefers to resolve legal disputes in the boardroom rather than the courtroom. He emphasized his position by saying, “My office was scheduled to meet with Paramount on Monday, August 24. I have pulled down this meeting. As I’ve said before, generally for all cases, I prefer to resolve disputes in the boardroom, not the courtroom. As I’ve also said, if the opposing party in litigation wants to meet in good faith to make a sincere effort to resolve the case, we’ll meet.”

Paramount has been actively trying to push the Attorney General toward a resolution. The company even went as far as asking a court to order the states involved to post a 1.9 billion dollar bond. Various industry groups, including the Directors Guild of America, IATSE, and Cinema United, have also joined forces with several California political leaders to urge a settlement. These groups argue that the ongoing uncertainty is negatively impacting the industry. Despite this pressure, Bonta appears to be standing firm.

It is worth noting that Paramount has agreed to hold off on closing the deal until the antitrust trial concludes, which is currently scheduled for March. This delay comes with a financial cost, as the company will begin accruing a ticking fee for shareholders of roughly 7 million dollars per day starting October 1 if the deal remains unclosed.

While Paramount has been seeking a way to move forward, Bonta has maintained that any acceptable settlement would require structural remedies. These would likely involve asset sales, a requirement that Paramount may not be willing to meet. For now, it seems the legal battle will continue without the prospect of immediate settlement talks.

Across the Atlantic, actors including Benedict Cumberbatch have also urged regulators to block the merger.