The timeline for California Attorney General Rob Bonta to engage in settlement talks with Paramount Skydance over its merger with Warner Bros. Discovery remains uncertain. However, sources indicate that David Ellison, the CEO of Paramount Skydance, has a few strategies he intends to employ.
One of Ellison’s approaches seems to involve framing Bonta, known for his progressive stance and currently attempting to halt the $81 billion merger, as out of alignment with other Democrats. This includes prominent figures like Governor Gavin Newsom, likely successor Xavier Becerra, and Los Angeles Mayor Karen Bass, many of whom view Bonta’s lawsuit as lacking legal merit and potentially harmful to the economy.
Concerns extend beyond Ellison’s warning of relocating Paramount and its famous Los Angeles studio if Bonta isn’t willing to negotiate by October 1. Industry insiders note that those worried about job security in Hollywood—from actors to writers—should also be attentive to the impact of technology experts now steering the entertainment industry.
Traditional studios ultimately need to merge for efficiency; if not, they risk being overshadowed by tech behemoths like Amazon or Apple. Once these companies acquire properties like Warner Bros. Discovery, their main focus may not be film production, but rather technological advancements—this could have serious implications for the industry.
A source familiar with Paramount’s perspective expressed frustration over the concerns raised by actors and writers regarding job cuts stemming from the merger. They emphasized that Ellison is passionate about film, suggesting that should the merger fail, the likelihood is high that Warner would end up with tech giants keen to utilize AI to streamline operations, potentially leading to more job losses.
It’s challenging to ascertain Ellison’s precise thoughts in this ongoing struggle for Warner Bros. Discovery. He has reportedly enacted a communication blackout after accusations emerged that he leaked negotiation details to the media. Though deemed insignificant, these leaks provided Bonta an opportunity to delay talks, prompting Ellison to restrict discussions primarily to his legal advisor, Makan Delharim.
Despite attempts to maintain confidentiality, insiders claim that Ellison’s fighter spirit remains intact. He seeks acknowledgment from influential political figures about the precarious state of major media companies, including Warner Bros. Discovery. The company’s shares are hovering near $28, close to Ellison’s proposed buyout price of $31, minus a risk reduction due to the ongoing lawsuit.
Prior to the merger discussions, Warner’s stock had been stagnant, even while CEO David Zaslav was revitalizing the brand with successful movies and reducing debt. If the merger doesn’t proceed, Warner will be left with approximately $30 billion in long-term liabilities, much of which originated when AT&T separated Warner Media and merged it with Discovery Inc.
While sources within Warner Bros. Discovery indicate they can maintain operations for a limited period, thanks to a $7 billion breakup fee if Ellison’s acquisition falters, they also acknowledge the challenges ahead in the current media landscape.
The pressure is mounting for Bonta, as currently, there are no signs of negotiations taking place. Ellison is potentially facing a hefty “ticking fee” of $7 million daily if he cannot finalize the deal this month. His team has openly stated they may relocate operations from Los Angeles to cities like Nashville, Texas, or even New Jersey if substantial discussions do not materialize. These locations are extending tempting incentives to attract production companies.
As of now, representatives for both Bonta and Paramount have yet to comment.
