RESOLVING THE LEDGER
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See the full story · 1 sourcesDavid Ellison — the founder of a film production company and son of billionaire Larry Ellison — has been at the helm of Paramount Skydance for just over a year. He's been fighting to acquire Warner Bros. Discovery for nearly as long.
The latest roadblock in his path, a group of state attorneys general seeking to stop the deal , may be his toughest yet. The antitrust hurdle and related delay have left the CEO hunting for avenues to get the deal done.
The delay in closing Paramount's acquisition of WBD could add hefty costs on top of the $110 billion proposed price tag at a time when media companies across the landscape are under intense pressure.
Yet, with a trial in the antitrust case set for March, Ellison has never felt more confident that the deal not only makes sense, but will get completed, according to a person familiar with his thinking, who asked to remain unnamed to speak candidly.
"The company believes strongly in this," Paramount's lead trial attorney Jeffrey Kessler said on CNBC in July, adding the company was prepared to bring the matter to the Supreme Court if necessary.
Still, Ellison appears to be making little ground with California Attorney General Rob Bonta, who is leading the states' charge in court. Both sides have said they are eager to make amends outside of the courtroom.
"I think the whole issue there is, will the state AGs be interested in settling, and I'm not quite sure there's any real incentive for them to settle given the fact the California home constituency here is overwhelmingly against the transaction," said Tom Rogers, a media veteran who's currently senior advisor to Versant Media Group and executive chairman of AI film and TV production company Fountain 0.
A Paramount spokesperson declined to comment for this article.
Ellison's pursuit of WBD began last September with three unsolicited bids to take over the storied entertainment company, which includes the legendary film studio, a portfolio of pay TV networks and the HBO Max streaming business.
Ellison's interest ultimately spurred a formal sale process that superseded a plan by WBD to split in two . When Warner Bros. Discovery crowned Netflix the bidding war winner, Ellison went hostile and promised WBD shareholders a premium.
In February, Netflix abandoned its pending transaction and Paramount entered into an agreement to buy the entirely of WBD. The deal has won approval from all global regulators, including the Antitrust Division of the U.S. Department of Justice.
That leaves Bonta and the other 11 suing states as the final threat to Ellison's long-sought-after acquisition.
Bonta has said his aim is in part to take up the baton where he feels President Donald Trump's administration has fallen short on regulation. He has said Trump has gotten "involved improperly" in other merger situations.
Meanwhile, the Ellison family's ties to Trump have drawn criticism. Larry Ellison is a longtime supporter of Trump, and the president has said publicly he'd like to see Warner Bros. Discovery's CNN land in Paramount's hands.
When speculation began in the spring that a group of states would seek to challenge the merger — putting particular focus on two segments of the combination: their extensive portfolios of pay TV networks and powerhouse film studios — Ellison's Paramount immediately began its outreach to Bonta's office, according to the person familiar with the matter. By mid-May the company had sent a list of potential concessions to Bonta, added the person.
Following a preliminary injunction granted by the California district court, which paused any movement on the deal for 14 days, Paramount said it was willing to officially delay the deal and move to a trial to fight its case for the merger.
However, the March trial date was later than company executives had hoped for, according to two people familiar with the matter.
In the ensuing weeks, Paramount went on the offensive.
Shortly after the lawsuit hit in mid-July , Ellison took his argument for the deal public, writing a New York Times op-ed . That piece followed others from industry leaders arguing both for and against the merger, expanding the debate beyond legal filings.
Ellison has also sought to win over Hollywood exhibitors with contracts guaranteeing that a combined Paramount-WBD would release a a minimum 30 films a year with 45-day theatrical windows for a period of at least three years, according to a person familiar with the contracts, who spoke on the condition of anonymity because they were not authorized to speak publicly.
And, reports surfaced that Paramount was considering relocating its studio and headquarters outside of California in response to Bonta's challenge. One of the people familiar with the matter told CNBC a move to Tennessee was on the table.
That suggestion largely backfired, with Bonta calling the threat to relocate "blackmail."
Last Thursday, the California AG said in a CNBC interview that he would be willing to hold talks outside of the courtroom, but that a settlement would require "robust structural remedies."
The following day a meeting was held at Bonta's office, according to a statement from the government official's spokesperson. While another meeting was slated for Monday, media reports of the meeting and what an eventual settlement could entrail — such as divesting some pay TV networks — led Bonta to call off the discussions , his office said.
On Monday, a Bonta spokesperson alleged that Paramount was behind the "leak" of the parties' discussions, which it further said were misrepresented, and said it demonstrated a "lack of good faith."
"As soon as Paramount stops playing games and engages sincerely, my office is happy to meet again," Bonta said.
Paramount responded later Monday denying it was the source of the leak.
"We remain hopeful and stand ready to continue good faith discussions to resolve the Attorneys General suit and move forward with our plans for increased competition and...
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