No one knows when or if California AG Rob Bonta will agree to hold settlement talks with Paramount Skydance regarding its merger with Warner Bros. Discovery – but David Ellison has a “few tricks up his sleeve,” On The Money has learned.
One of Paramount Skydance CEO’s tricks, I am told, is to try to portray Bonta – a progressive pol who has filed a suit trying to block the $81 billion mega deal — as out of step with even lefty Dems.
Those include Gov. Gavin Newsom and his likely successor Xavier Becerra, Los Angeles Mayor Karen Bass and plenty of others in the state’s Democratic Party. They all see Bonta’s lawsuit as weak on the law (there are no real antitrust violations in merging two middling companies), and economically dangerous, according to people close to the situation.
Their worry goes beyond Ellison’s threat to move Paramount and its iconic Los Angeles studio “lot” out of the state if Bonta doesn’t agree to sit down and settle by Oct. 1 without a costly court battle.
Indeed, the Paramount camp is warning that if you’re worried about employment in Hollywood – from actors to writers to key grips – then worry big time about the tech geeks running entertainment, according to industry sources.
Traditional studios can’t compete unless they merge and create economies of scale. Otherwise, they will eventually be gobbled up by the likes of Amazon, Apple, Google, Netflix and god knows what other tech giants emerge.
Once they get their hands on brands like Warner Bros. Discovery, these firms will use their expertise not in film production but in technology. The consequences could be dire.
“These actors and writers and Bonta are such morons when they talk about job losses because of this merger,” said a person with knowledge of Paramount’s thinking.
“Ellison loves movies and Warner will eventually be sold to Big Tech if this deal doesn’t go through and they can’t wait for AI to start eliminating jobs.”
To be sure, it’s hard to discern exactly what Ellison is thinking in his latest battle to take over Warner Bros. Discovery. As reported, he has instituted an information blackout after Bonta accused him of leaking deal negotiations to the press.
Those leaks were non material, my sources tell me, but they gave the California AG an excuse to postpone any settlement talks. That’s why Ellison is keeping a tight lid on his thinking these days, conferring mainly with his legal chief, Makan Delharim.
Yet there’s no such thing as a 100% blackout on anything, and people who know the Paramount Skydance chief say he is at heart a fighter and a content guy; an indie producer who values the creative process, and that’s the message he wants the state’s political titans to know, I am told.
He also wants them to appreciate the current desperate shape of Big Media, Warner included. WBD’s stock is trading at around $28 a share, close to the Ellison offering price of $31 minus a small haircut for risk in the Bonta lawsuit.
Before talk of the merger surfaced last year, WBD’s stock languished even as the company’s very capable CEO David Zaslav led a creative renaissance with hit movies and trimmed its balance sheet. If this merger is blocked, Warner will remain saddled with $30 billion in long-term debt, much of it from its birth in 2022 when AT&T spun out Warner Media and Zas combined it with Discovery Inc.
My sources inside WBD say they can survive independently for a few years because they will be paid a $7 billion breakup fee if Ellison can’t get his purchase through. But they also concede $7 billion only gets you so far in a difficult media environment.
“We’ll be OK for a while but in a couple years we will have to figure out what to do,” one WBD executive tells me.
Meanwhile, the clock is ticking for Bonta (as of this piece going to press, there are no discussions). Ellison is on the verge of paying a costly “ticking fee”— $7 million a day – if he can’t close by the end of the month.
He and his peeps are making it clear they will pick up and move from LA to somewhere like Nashville, Texas or even New Jersey (which has been dangling incentives for production companies) if there are no serious discussions to come to a deal that was approved by every regulatory body across the world except a handful of state AGs.
Press reps for Bonta and Paramount had no immediate comment.