California Attorney General Rob Bonta is expected to require Paramount to sell off specific cable channels and maintain its film studio as a separate entity from Warner Bros. Discovery as conditions for approving a proposed merger. Representatives from Paramount and California state officials are scheduled to meet Monday to discuss potential settlement options regarding a state antitrust lawsuit filed against the transaction. Legal counsel for both parties met Friday to establish the agenda for these negotiations, which will focus on cable and motion-picture operations.
The current legal conflict follows a lawsuit filed on July 13 in Oakland federal court, where California and 11 other states moved to block Paramount’s $110 billion acquisition of Warner Bros. Discovery. The state coalition argued the merger would reduce competition in movie distribution and cable television, leading to higher consumer prices and lower wages for workers. The Writers Guild of America has also filed a separate legal challenge against the merger.
Paramount has requested that a U.S. judge compel the suing states to post a $1.88 billion bond to cover costs associated with delays. The company reported that it faces a $7 million daily penalty if the deal is not finalized by September 30, and it expects to pay $1.3 billion in non-recoverable "ticking fees" to Warner Bros. shareholders by the time the trial concludes in April. Attorney General Bonta opposed the bond request, stating that the companies willfully included these fees in their contract and that Paramount is responsible for the financial risks of its own agreement.
The scale of the financial impact is significant, involving a $110 billion acquisition and potential delay costs reaching $1.7 billion in ticking fees by June 1, plus an additional $190 million in financing costs if the case extends to mid-2027. For Paramount, these costs translate to approximately $210 million per month in penalties starting in October. The outcome will determine whether Paramount can execute its strategy to compete directly with streaming services like Netflix and Disney or if it must divest assets to satisfy state regulators.
The trial for the states' challenge is currently scheduled to begin in March, with final legal briefs due in April. A separate regulatory deadline looms on February 19, when the company’s clearance from the U.S. Department of Justice is set to expire. While Paramount noted that 68 countries have already cleared the transaction, the state-level lawsuits remain the primary barrier. The next immediate step is the Monday meeting between state officials and Paramount representatives to determine if a settlement can be reached before the trial date.