California AG: Settling Paramount-WBD merger lawsuit requires 'robust structural remedies'

California Attorney General Rob Bonta told CNBC's David Faber on Thursday that settling the antitrust lawsuit against the proposed Paramount Skydance acquisition of Warner Bros. Discovery would require "robust structural remedies."

Bonta and 11 other state attorneys general filed a lawsuit in July seeking to block the merger. The group of suing states includes Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.

Key Arguments

Bonta described the case as a "black-and-white" antitrust matter, stating that the states' main concern centers on the film and pay TV industries under the proposed combination.

"[Paramount] wanted to talk about everything except for what this case is about," Bonta said. "They want to talk about the streaming market, which we don't allege in our complaint. They want to talk about CNN, which is not a focus of our complaint. They want to talk about the foreign regulators. We want to talk about the three markets that we set forth in our complaint, where we think there's antitrust violation."

The lawsuit focuses on the combined company's size, which would control nearly one-third of films and nearly a third of basic cable TV programming.

Settlement Possibilities

Bonta indicated the states remain open to discussions outside the courtroom.

"I will say that coming to the table has always been on the table," Bonta said. "And if [CEO David] Ellison and Paramount want to come to the table in good faith and talk, we want to talk, too. We're happy to have that conversation."

He added: "We do prefer to resolve cases in the boardroom instead of the courtroom, but for now we're bringing our case, and, you know, I hope they can focus on the actual allegations we make in our complaint."

Timeline and Trial

Paramount, which initially sought to close the deal by Sept. 30, agreed to delay the proposed acquisition of WBD to as late as June 2027. A trial is scheduled for March.

Market Concentration Concerns

If the two companies were to combine, it would unite:

• Film studios: Warner Bros. and Paramount
• TV networks: Paramount's CBS, MTV, and BET, along with WBD's CNN, Discovery, and others
• Streaming platforms: Paramount+ and HBO Max

Bonta dismissed arguments that the pay TV subscriber base is shrinking due to streaming, stating: "Whether the market is shrinking or growing is really irrelevant."

He said a combined Paramount-WBD would create a "presumptively illegal market concentration" in the film and TV markets identified in the lawsuit.

"We are the ones who've looked at this from a straight-up law and facts perspective in the American economy under American law under Clayton Act Section 7, which applies here as antitrust law," Bonta said. "[The law has] been on the books for over a century. And it's just a straight up, meat-and-potatoes, black-and-white, bread-and-butter, antitrust case."

The Clayton Antitrust Act is the more-than-100-year-old law that prohibits anticompetitive mergers and acquisitions.

Paramount's Response

Paramount has previously called the states' lawsuit a "misrepresentation of competition in the entertainment industry today" and said it plans to "vigorously defend the transaction."