California scraps settlement talks with Paramount over Warner Bros. Discovery merger

California's attorney general on Sunday called off a settlement meeting with Paramount Skydance that had been scheduled for Monday, accusing the company of leaking details of an earlier negotiating session and then misrepresenting what was said. The cancellation is the sharpest turn yet in a six-week standoff between the studio and the coalition of states trying to block its $110 billion purchase of Warner Bros. Discovery.

Attorney General Rob Bonta, who is leading the 12-state challenge, said his office had planned to sit down with Paramount representatives for a first round of settlement talks on Monday morning. He scrapped those plans late Sunday, saying the company had broken an agreement to keep a Friday meeting confidential and had then given reporters an inaccurate account of what was discussed.

A Paramount spokesperson denied responsibility for any leak and said the company still wants to negotiate. The dispute leaves a proposed settlement no closer than it was a week ago, with a federal antitrust trial over the merger still on the calendar for next spring.

The numbers

Bonta's coalition sued to block the acquisition in July, arguing that combining Paramount Skydance and Warner Bros. Discovery would concentrate too much control over American film and television in one company. According to the file-stamped complaint, the combined company would control roughly 27 percent of wide-release theatrical distribution, more than 30 percent of the market for the year's top-grossing films, and about 27 percent of basic cable channel licensing.

Under the merger agreement, Paramount is paying $31.00 a share in cash for Warner Bros. Discovery, a deal Paramount's own investor-relations office values at $110 billion. Warner Bros. Discovery shareholders approved the transaction at a special meeting in April. Paramount has said it has since satisfied every regulatory condition attached to the deal, securing antitrust clearance in nearly 70 countries, including approval from the U.S. Department of Justice. The states' lawsuit, filed separately in federal court under Section 7 of the Clayton Act, is the one hurdle regulators have not cleared.

The financial clock is also running. Under the terms Paramount struck with Warner Bros. Discovery, the company owes the target roughly $7 million a day in fees starting around October 1 if the deal has not closed, and the merger agreement itself lapses in June 2027 if the litigation drags on that long.

How the fight started

Paramount Skydance was itself the product of a merger: David Ellison's Skydance Media took control of the old Paramount Global last year in a deal financed in part by his father, Oracle co-founder Larry Ellison, ending the Redstone family's decades-long hold on the studio. Barely eight months later, the newly combined company announced in February that it would acquire Warner Bros. Discovery outright, a deal that would bring CBS, Paramount Pictures, MTV and Comedy Central under the same roof as Warner Bros., CNN, TNT, HBO and Discovery's cable portfolio.

Bonta's coalition — California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington — filed suit in the U.S. District Court for the Northern District of California in July, arguing that no set of divestitures would fix a deal pairing two of Hollywood's five major theatrical distributors and two of its five major basic-cable owners. Bonta said at the time that the "unlawful merger of these two entertainment behemoths would lead to higher prices, lower quality, and less content for film and television." The Writers Guild of America filed a related suit raising similar competition concerns. A judge has since set the antitrust trial for March 2027, and the companies agreed to hold off closing the merger until that case is resolved in court.

Settlement talks had only just begun. Paramount and the states' lawyers met for a first, informal session on Friday, and Monday's meeting was supposed to build on it. Instead, according to Bonta, Paramount both leaked what was said behind closed doors and gave a misleading version of it to the press over the weekend — conduct he said made a second sit-down pointless for now.

Among the brands and businesses that would end up under one owner if the deal eventually closes:

• Paramount Pictures, CBS, Nickelodeon, MTV, Comedy Central and the Paramount+ streaming service
• Warner Bros. Pictures, HBO and HBO Max, CNN, TNT, TBS and the Discovery cable networks
• Two of Hollywood's largest film libraries and physical studio lots, spanning thousands of theatrical titles

Who is affected

The delay is being felt most directly in Los Angeles, where the merger's uncertain fate has coincided with a broader production slowdown. Los Angeles Mayor Karen Bass has pressed both sides to reach a deal, citing county estimates that as many as 4,500 local film and television jobs could disappear within three years if the companies combine without safeguards, on top of roughly 52,000 entertainment jobs the region has already lost over the past four years to declining production. Malakhi Simmons, a vice president of IATSE Local 728, the union representing studio lighting technicians, said the standoff is discouraging productions from committing to Los Angeles at all. Bass's intervention has itself proven divisive: the Writers Guild publicly criticized her for suggesting the choice was between a quick settlement and continued job losses, calling that framing false.

Employees and shareholders of both companies are also waiting on the outcome. Warner Bros. Discovery's cable networks — including CNN, TNT and Discovery Channel — and its streaming and studio operations would be folded into Paramount if the deal eventually closes, while a trial loss for the companies could force Paramount to unwind or restructure the transaction after having already spent months and considerable legal fees pursuing it.

"Not only did Paramount leak the alleged substance of settlement discussions, but they misrepresented these discussions, demonstrating a lack of good faith. As soon as Paramount stops playing games and engages sincerely, my office is happy to meet again."

That statement from Bonta, released Sunday night, was the sharpest language either side has used since talks began. A Paramount spokesperson pushed back directly on the leak accusation: "Paramount has not been the source of the leaks of any of our confidential discussions with the AG's office," the company said, adding that it "remains hopeful and stands ready to continue good faith discussions to resolve the Attorneys General suit." Bonta has separately said any settlement would need to include "robust structural remedies" rather than modest concessions, signaling that even a resumed negotiation would not be quick or easy.

What happens next

Neither side has said when — or whether — settlement talks might resume. Bonta's office has left the door open, saying it would meet again once Paramount "engages sincerely," but has set no new date. Absent a settlement, the case moves toward its March 2027 trial date before U.S. District Judge Araceli Martínez-Olguín, with pretrial discovery and motions continuing in the meantime.

A settlement, if the two sides eventually reach one, would likely need to include the kind of concessions Bonta has previously described as "robust structural remedies" — potentially the sale of specific networks or theatrical assets rather than behavioral promises about pricing or programming. Paramount has publicly maintained that the deal is procompetitive and has emphasized that federal antitrust regulators and dozens of foreign competition authorities have already cleared it. That gap between the two sides' starting positions is one reason lawyers on both sides have cautioned that a trial, not a settlement, remains the more likely path to resolving the case.

The financial pressure on Paramount to find a resolution sooner rather than later is real: the daily fees owed to Warner Bros. Discovery accrue regardless of how the litigation proceeds, and the broader merger agreement expires in June 2027 if the case has not been resolved by then. For Los Angeles production workers, the practical effect is more uncertainty layered on top of an industry already grappling with reduced local filming. City and union officials say they will keep pushing both sides toward a deal that keeps production commitments in the region, whatever shape a final settlement — or a trial verdict — eventually takes.