California Attorney General Rob Bonta told CNBC's David Faber on Thursday that the group of states suing to block Paramount Skydance's acquisition of Warner Bros. Discovery would require "robust structural remedies" to reach a settlement in the antitrust case.
"[Paramount] wanted to talk about everything except for what this case is about. 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," Bonta said.
Bonta and 11 other state attorneys general filed a lawsuit in July seeking to block the merger. The group of suing states also includes Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington. In the suit, the group focuses on the size of the combined company and how it would control nearly one-third of films and nearly a third of basic cable TV programming.
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 will be heard on the matter in March.
There has been widespread speculation about whether Paramount and the states will hold settlement talks to bypass the March trial.
"I will say that coming to the table has always been on the table. 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," Bonta said. "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."
Bonta said it's no secret Paramount wants the states to consider a settlement.
If the two companies were to combine, it would bring together the famed movie studios Warner Bros. and Paramount, as well as a massive portfolio of TV networks including Paramount's broadcast network CBS and pay TV channels such as its MTV and BET with WBD's CNN, Discovery and others. It would also bring together streaming platforms Paramount+ and HBO Max.
"Whether the market is shrinking or growing is really irrelevant," Bonta said Thursday in response to the argument that the pay TV subscriber base has been decreasing due to the rise of streaming.
Bonta said a combined Paramount-WBD would create a "presumptively illegal market concentration" in the film and TV markets the group of attorneys general 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 Seven, 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 has previously called the states' lawsuit a "misrepresentation of competition in the entertainment industry today," and said it plans to "vigorously defend the transaction and demonstrate that this challenge is inconsistent with sound competition and policy and the competitive realities of the media marketplace."
Paramount's lead trial counsel, Jeffrey Kessler, earlier told CNBC that Paramount "believes strongly" in the combination of the two companies and is prepared to bring the matter to the Supreme Court if it was faced with a prolonged blockade to closing the deal.
During Paramount's August earnings call, Ellison said he's "confident" the deal will close.
A Paramount spokesperson didn't immediately respond to a request for comment about Bonta's remarks on Thursday.
