Paramount Skydance has a strategy for getting its merger with Warner Bros. Discovery approved by Rob Bonta – and it involves making the California AG a pariah in his party while getting an assist from the mayor of Los Angeles, On The Money has learned.
The game plan “is to isolate Bonta in the state and in his own party,” said one person close to the David Ellison-run media giant. “Every Dem pol in the state wants a settlement and is worried that Ellison will leave. They also think his antitrust case is a joke.”
The effort involves lobbying these pols to speak up against Bonta’s lawsuit to break up the $81 billion deal. Aside from believing the antitrust case is weak – Paramount and WBD are too middling companies incapable of becoming a monopoly – Ellison has threatened to leave the state if Bonta doesn’t agree to a reasonable settlement. If he goes there Ellison would take tens of thousands of jobs and billions in economic activity with him.
One of those top Dem state pols, LA Mayor Karen Bass, caused an uproar when she suggested on Wednesday that Ellison now has one foot out the door, and that she is here to save the day by getting both sides to work out their differences.
“I will continue to engage with Paramount, Attorney General Bonta, and entertainment leaders to keep jobs in LA,” Bass wrote on X. “This industry was built here. Its workers are here. I’m going to fight like hell to keep it here.”
A Wednesday report of Ellison’s decision to bolt by TMZ left out key context. First, he has made no secret that without meaningful talks to settle the lawsuit by Oct. 1, Paramount will leave the state. Meanwhile, as On The Money reported last week, Ellison has a few “tricks up his sleeve,” to force Bonta to acquiesce.
Ellison, his billionaire backer dad Larry Ellison and their highly resourceful chief legal counsel Makan Delrahim are looking to make use of the fact that in addition to Bass, Gov. Gavin Newsom and his likely successor Xavier Becerra are both worried about the prospect of Paramount leaving the state.
California risks losing more than 50,000 jobs if Ellison leaves the city and shutters its iconic lot where classics such as “The Godfather” were filmed for a less hostile regulatory environment such as Nashville, or Austin, Texas.
Bass is a key player in this effort and Paramount expects her fellow high-profile Democrats to speak up and squeeze Bonta as the Oct. 1 deadline approaches, according to people with knowledge of the matter.
“These guys (at Paramount) are formidable and they have the entire state Dem establishment from Bass to Newsom to Becerra asking Bonta ‘what are you doing?’ ” said another Paramount Skydance insider. “My guess this gets settled with some employment guarantees that appeases Bonta.”
A spokeswoman for Paramount Skydance declined to comment. Reps for Newsom and Becerra had no immediate comment.
The big question is still whether Bonta is open to a settlement or if he’s just looking to squeeze the publicity as he can from the suit. He has said he wants vast structural changes to the merger, which Ellison has said is a non-starter. Bonta has enlisted the support of a few other lefty AGs to join his case, including New York’s Tish James, all of whom are staunch opponents of President Trump, a close friend of Larry Ellison.
Bonta, a far left Democrat, is said to be eying a future run for governor, and his suit is popular with the progressive wing of the state Democratic Party, including lefty actors like Mark Ruffalo, who have been arguing combining the companies will lead to less competition and job losses.
Their wonky analysis leaves out the reality that Paramount and WBD need to merge to remain competitive against Big Tech and tech adjacent Netflix, which has the cash to continue to dominate the sector. The deal has been approved not just by the US antitrust division, but just about every major global regulator.
“If Bonta is successful that means a state AG could stop a deal that the world has approved,” said the Paramount insider. “What business would stay in the state with that going on?”
Bonta has yet to say if he’s relenting. In a statement yesterday, his office told the California Post: “It’s no secret that Paramount has been making this threat, despite its alleged commitment to California and Hollywood. What Paramount decides to do is Paramount’s choice alone. We’ll continue to apply the law without fear or favor and continue to be open to coming to the table for good faith discussions.”
The federal judge in the lawsuit has ordered both sides to engage in settlement talks by mid October, but there’s no guarantee that would force Bonta to back off his structural changes demand.
If the case goes to trial, the litigation would be both a potential deal killer and costly to Paramount Skydance since the company is on the hook for a $7 million “ticking fee” every day until the transaction closes, and that might not be well into next year. If Bonta blocks the deal or the Ellisons walk away, they would pay WBD a $7 billion breakup fee.