California Atty. Gen. Rob Bonta\u2019s deal to allow the $111-billion Paramount-Warner Bros. merger to proceed was struck amid political pressure from state leaders and concern from some Democratic attorneys general that concessions from the studio fell short, according to multiple sources familiar with the negotiations.<\/p>\n
As recently as this weekend, New York Atty. Gen. Letitia James and Connecticut Atty. Gen. William Tong \u2014 who had signed on to the lawsuit \u2014 had said they needed more concessions, according to three knowledgeable sources close to the negotiations.<\/p>\n
In an interview with The Times on Tuesday, Tong said Bonta was \u201cdoing his very best in very difficult circumstances\u201d to steer the coalition to a favorable outcome, but amid \u201ca lot of political pressure\u201d from others in California that \u201cdid not help.\u201d<\/p>\n
\u201cI\u2019m not going to sugarcoat it. This is ultimately not what I wanted,\u201d Tong said.<\/p>\n
Tong said one of his chief concerns \u2014 shared by others in the 12-member coalition of states \u2014 was with the merger\u2019s consolidation of CNN and CBS News under Paramount Skydance Chief Executive David Ellison, the billionaire media mogul close to President Trump and son of Oracle co-founder and Republican mega-donor Larry Ellison.<\/p>\n
Tong raised similar concerns after the announcement of the deal, when he said publicly that his state had \u201cled the fight to the bitter end to protect the editorial independence of CNN and CBS News,\u201d and that he was \u201cdeeply disappointed that we could not do more.\u201d<\/p>\n
Paramount declined to comment.<\/p>\n
With its economy and global reputation heavily intertwined with Hollywood\u2019s allure and ability to survive, California had more at stake in the negotiations. <\/p>\n
In exchange for the states lifting their antitrust challenge, Bonta said Monday that the studio had agreed to either produce 30 or more films annually for the first five years of the combined company or divest the Miramax film studio; separately negotiate basic channel agreements for Paramount and Warner Bros. or divest from major cable channels; spend $300 million more each year on film production in the U.S.; maintain its Melrose Avenue and Burbank lots; and establish a board to ensure editorial independence at CNN and CBS News, which also fall under the merger.<\/p>\n
Bonta said the deal has \u201creal teeth,\u201d and that he \u201cwill hold Paramount accountable\u201d moving forward.<\/p>\n
Since then, however, other Democrats have voiced less confidence, and some in the coalition believed they could have held out for better terms as the midterm elections approached.<\/p>\n
Some also questioned whether Bonta and other California leaders were swayed by Ellison\u2019s threat to move Paramount out of the state.<\/p>\n
Gov. Gavin Newsom, Los Angeles Mayor Karen Bass and Xavier Becerra \u2014 the front-runner in the race to succeed Newsom as governor \u2014 had all urged Bonta to settle the case. In his initial statement on the deal, Ellison thanked the Democratic attorneys general for working through their differences, but also thanked Newsom for \u201chis support throughout this process.\u201d<\/p>\n
Sen. Cory Booker (D-N.J.), the ranking Democrat on the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, said Bonta and the other state attorneys general \u201ctook on one of the most powerful media companies in the world, a company backed by the full weight of the White House,\u201d and that Paramount had answered \u201cwith what amounted to extortion\u201d by threatening to withdraw from California if the deal was blocked.<\/p>\n
Booker claimed the merger remains illegal and questioned the independence of any editorial board picked by and reporting to Ellison \u2014 saying it would not stop him from making \u201csweeping changes at CNN\u201d to please Trump.<\/p>\n
\u201cThis is what happens when federal enforcers abandon their posts. States are left to carry the fight alone, and even the strongest state enforcers cannot outlast a company willing to say anything and spend anything,\u201d Booker said. \u201cThat is not justice. That is a price tag.\u201d<\/p>\n
Dissent before the deal<\/p>\n
The pace of the negotiations, which had been on-again, off-again for weeks, quickened last week, and Bonta\u2019s office had reached a deal with Paramount by Friday, sources said. <\/p>\n
But there was a last-minute hiccup: Some members of the coalition felt the deal fell considerably short of what they had been seeking.<\/p>\n
Among other things, James was dismayed that the Writers Guild of America \u2014 which had separately sued to block the deal \u2014 hadn\u2019t been brought into the negotiations. She pushed to include the WGA and to bolster Paramount\u2019s commitment to the WGA\u2019s health and pension fund.<\/p>\n
Over the weekend, Paramount agreed to increase its health fund commitment from $10 million to $17.5 million. Still, the WGA had largely been shut out of the process, and said Monday that it continued to \u201cbelieve the merger will cause damage to writers and the industry at large.\u201d<\/p>\n
One source familiar with the negotiations said the states had four separate votes against settling on Sunday, but the resistance eventually crumbled with word that the WGA was backing out of the fight. Two sources familiar with the matter said some in the coalition were caught off guard by the speed with which Bonta\u2019s \u201ctone\u201d changed and the deal was reached. Some had felt Paramount may be more inclined to grant concessions once it had to start increasing its payout to Warner Bros. investors starting Oct. 1.<\/p>\n
On Tuesday, Bonta told The Times that he would not comment on \u201cwhat specifics led up to\u201d the deal, except to note that all 12 state attorneys general in the coalition signed on to it. <\/p>\n
\u201cIt was unanimous, and I\u2019ll leave it at that,\u201d he said.<\/p>\n
Bonta said there was certainly \u201ca lot of interest\u201d in the case from other elected officials, some of whom made their positions clear, but that \u201cnone of it had any influence\u201d on him.<\/p>\n
\u201cI need to look at the law and the facts,\u201d he said. \u201cIf we\u2019re able to get a solution to our antitrust concerns, we take it.\u201d<\/p>\n
Bonta said he could not comment on what effect Ellison\u2019s threats to move Paramount out of California might have had on his decision and that his \u201cfocus was on the antitrust concerns\u201d \u2014 which he believes the deal substantially addresses.<\/p>\n
A source close to the governor\u2019s office said Newsom communicated frequently with Bonta and Ellison, acted as an unofficial mediator and urged them to reach a resolution, but did not try to control the terms of the deal and respects Bonta\u2019s role as the state\u2019s independently elected law enforcement leader. Newsom appointed Bonta as California\u2019s attorney general in 2021 after Becerra, who was serving in that post, accepted a position in President Biden\u2019s cabinet. California voters elected Bonta as attorney general in 2022.<\/p>\n
The source said Newsom wanted the two sides to settle the case because he was concerned that the state could face protracted litigation, ultimately lose in court and end up with nothing. Paramount leaving California for Nashville \u2014 a destination floated by Ellison \u2014 also would have been an economic blow to the state.<\/p>\n
Newsom has tried to keep businesses headquartered in the state due to the economic and budgetary impacts of losing companies and their wealthy chief executives to other places, and recently signed legislation to create a new post-production tax credit for studios. Last year, he doubled the state\u2019s existing film and television tax credit in an effort to support the industry.<\/p>\n
Mixed reaction<\/p>\n
Newsom and many of Bonta\u2019s fellow attorneys general echoed his claims of victory. <\/p>\n
James said the deal \u201cwill allow the film and television industry to continue to thrive with more movies produced in America and $1.5 billion of new investment in film production.\u201d Oregon Atty. Gen. Dan Rayfield said it \u201ckeeps real competition in place, ensures that productions will continue, and ensures journalistic independence.\u201d Arizona Atty. Gen. Kris Mayes said it would protect businesses, including local movie theaters. Colorado Atty. Gen. Phil Weiser said it would protect \u201cmoviegoers and producers.\u201d<\/p>\n
In a statement, Newsom thanked Bonta for his work to reach the deal, which he called \u201ca practical path forward\u201d that \u201cprotects California jobs while putting a safeguard in place to help preserve editorial independence for two of America\u2019s most important news organizations.\u201d<\/p>\n
Still, it was clear that others viewed the deal as a partial win at best.<\/p>\n
New Mexico Atty. Gen. Ra\u00fal Torrez called it a \u201cgreat first step.\u201d Massachusetts Atty. Gen. Andrea Joy Campbell said the states were \u201cunable to secure every protection we fought for,\u201d and that she \u201cwould have liked to see more.\u201d Minnesota Atty. Gen. Keith Ellison stressed that the deal should not be seen as an endorsement of the merger.<\/p>\n
\u201cI believe mergers like this are never done with the best interests of consumers, workers and small businesses in mind and are instead designed to help a select few get richer,\u201d he said.<\/p>\n