Paramount, California to hold settlement talks on Warner Bros. deal Monday

Paramount and California state officials will meet Monday to discuss a possible settlement of the antitrust lawsuit blocking the $110 billion acquisition of Warner Bros. Discovery, the New York Times reported Saturday.

The meeting includes senior executives and lawyers from both sides. It has been in the works for about a week, the Times said, citing a person familiar with the matter. The talks are preliminary. There is no assurance they will lead to meaningful negotiations toward a settlement, the report added. Paramount requested the meeting.

California Attorney General Rob Bonta and 11 other state attorneys general sued in July to block the deal. They argued it would reduce competition in film distribution and cable television, harming theaters and pay TV distributors. New York and Arizona were among the states that joined the suit. The complaint said the combination of two of the most storied film studios would raise prices for consumers and make wages less competitive for workers.

Bonta called the deal an "unlawful merger" that would "lead to higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately, audiences on every sofa and movie theater seat in the US." On Thursday, he told CNBC that the acquisition would require "robust structural remedies" to reach a settlement.

Pressure to settle has grown in recent weeks. California Governor Gavin Newsom, Los Angeles Mayor Karen Bass and the Directors' Guild of America have all called for a resolution. The Writers Guild of America and several prominent Hollywood actors have also opposed the merger, warning of job losses.

Bonta told CNBC that Paramount had tried to steer talks toward streaming and foreign regulators. His complaint focuses on three markets: film distribution, cable television and pay TV. "They want to talk about everything except for what this case is about," Bonta said.

Paramount agreed to delay the acquisition to as late as June 2027 because of the legal challenge. A trial is set for March. If the deal drags beyond September 30, Paramount will owe Warner Bros. Discovery shareholders a "ticking fee" worth roughly $650 million in cash every quarter, according to earlier CNBC reporting. Should the deal collapse entirely, Paramount would owe WBD a $7 billion breakup fee.

The U.S. Department of Justice's antitrust division cleared the merger in June. European regulators approved it in July. The state attorneys general and industry groups remain opposed.

Warner Bros. Discovery shares have an Alpha Score of 47 out of 100, a mixed reading that reflects the uncertainty around the deal's outcome.

The Monday meeting is the first direct negotiation between the parties since the lawsuit was filed. It is unclear whether Bonta will accept any proposal that does not include structural changes to the deal's terms.