Paramount merger settlement talks stall; Iowa and Montana ask SCOTUS to Block AGs Antitrust lawsuit

The state attorneys general from Iowa and Montana filed a motion with the U.S. Supreme Court on Tuesday to stop the antitrust lawsuit brought by 12 state attorneys general to halt the $110  billion Paramount Skydance-Warner Bros. Discovery merger.

Iowa’s attorney general Brenna Bird and Austin Knudsen, the AG for Montana–both of them Republican–have named California and 11 other Democratic states as defendants in a Bill of Complaint. The two AGs want to prevent what they describe as a “politicized enforcement action” aimed at halting the proposed acquisition.

‘As soon as Paramount stops playing games and engages sincerely, my office is happy to meet.’ Rob Bonta

“Twelve states have effectively vetoed a transaction that the other thirty-eight and the United States declined to challenge,” the motion states.  “This Court is not merely the best forum for this controversy.  It is the only one.”

Knudsen and Bird argue that the antitrust lawsuit would negatively impact their states’ economies and burden the national economy. Based on these and other arguments, they asked the Supreme Court to expedite their case and order the defendants to respond by September 15. They also want the justices to consider the case by October 9.

It is unclear whether the High Court will take up the case.

In other developments, late Sunday evening, California Attorney General Rob Bonta canceled settlement talks with Paramount scheduled for Monday, accusing the company of leaking details of a Friday meeting to the media.

“Not only did Paramount leak the alleged substance of settlement discussions, but they misrepresented these discussions, demonstrating a lack of good faith,” Bonta said in a statement first reported by the New York Times.

“As soon as Paramount stops playing games and engages sincerely, my office is happy to meet.”

Paramount Skydance, led by Chairman and  CEO David Ellison, denied leaking the information.

“We share AG Bonta’s concerns about public discussions and misreporting that has surrounded this deal,” Paramount said in published reports. “Paramount has not been the source of the leaks of any of our confidential discussions with the AG’s office,” it said in a statement first published in Variety.

Since July, when the 12 state attorneys general filed their antitrust lawsuit to block the merger of the two entertainment giants, there has been a flurry of legal activity, with both sides conducting strategic public relations campaigns that have played out in the media.

The antitrust trial date is currently set for March 2027, which some critics say creates uncertainty in the entertainment industry.  And in recent weeks, there has been a growing call for a settlement.  Some of the loudest calls are coming from state and local politicians, including L.A. Mayor Karen Bass, who is up for reelection; Xavier Becerra, who is running for governor of California; and current governor Gavin Newsom, who is widely believed to be planning a presidential bid in 2028.

The canceled settlement talks are not good news for Paramount, which is facing an estimated $7 million “ticking fee” to be paid to WD shareholders for each day after September 30 that the deal with Warner Bros. Discovery does not close.

The proposed merger of Paramount Skydance and Warner Bros. Discovery has been cleared by the United States Department of Justice and by nearly 70 jurisdictions around the world–although some of the approvals have come with concessions.

However, Bonta, who is leading the AGs’ legal fight against the merger, has said the deal would create a monopoly and reduce competition across many facets of film and television production. He and the other attorneys general want to see “robust structural” changes in the deal, such as the sale of cable networks and keeping the movie studio operations completely separate.  He says Paramount’s promise to produce a high volume of movies each year is not enough.