Rumor has it that Paramount Tianmu (PSKY.US) is close to reaching a settlement agreement to advance the $110 billion Warner takeover case, but some state attorneys general still have no support

The Zhitong Finance App learned that, according to reports, Paramount Tianmu (PSKY.US) is in in-depth negotiations with state attorneys general to complete its $110 billion acquisition of Warner Bros. Exploration (WBD.US), but not all state attorneys general support this plan. People familiar with the matter revealed that over the past few days, California Attorney General Rob Bonta, who has led a coalition of 12 states and filed lawsuits to challenge the deal, has been trying to reach a settlement agreement with Paramount. New York Attorney General Letitia James has always opposed the terms of the agreement and wants additional protections for employees. The report also said that Connecticut and at least two other states are also concerned about the settlement agreement and currently do not support the plan. These dissenting states want Paramount to make more concessions. According to another person familiar with the negotiations, Connecticut Attorney General William Tong is “working to maintain the independence of CNN and CBS News.”

Warner Bros. explores shares jumped 8.3% in after-hours trading on Friday evening. Earlier reports suggested that settlement negotiations between Paramount and Rob Bonta had reached an advanced stage. According to another report, the terms involved in the settlement negotiations between the two sides include independent supervision of CNN and a commitment to the number of theatrical movies to be distributed.

Paramount is facing the ultimate test that will determine the fate of its media empire. The $111 billion deal aimed at merging Paramount and Warner Bros. Exploration into the new Hollywood giant has now received antitrust approvals from 68 countries and jurisdictions around the world, but it has been blocked in the mainland by antitrust lawsuits initiated by 12 states led by the Democratic Party and the Writers' Union (WGA).

The regulatory battle for the largest merger and acquisition in Hollywood history began in July of this year. On July 13, California Attorney General Rob Bonta led a formal lawsuit with 11 other states, alleging that Paramount's $111 billion acquisition of Warner Bros. Exploration would seriously damage market competition.

The states indicated in the lawsuit that the merged entity would gain illegal market shares in film production and cable television. Specifically, after Paramount channels (such as MTV and Nickelodeon) are merged with channels owned by Warner Brothers, the new company will account for 27% of all fees paid by pay-TV distributors to channel owners, and 34% of the viewership share on basic cable networks.

On July 20, California District Judge Araceli Martínez-Olguín issued a temporary restraining order requiring the transaction to be suspended for at least two weeks. Paramount then agreed to suspend the deal until June 2027 at the latest, pending a court decision. The antitrust trial is scheduled to commence on March 2, 2027.

The delay brought about by the lawsuit is putting enormous financial pressure on Paramount. According to the terms of the deal, if the merger is not completed by September 30, 2026, Paramount Tianwu will be required to pay “ticking fees” (ticking fees) of $7 million per day to Warner Bros. Exploration shareholders.

Paramount has petitioned the court to request $1.88 billion in security from the 12 states filing the lawsuit to cover the cost of delayed transactions due to the lawsuit. The company pointed out that by the end of the trial in March next year and the final legal statement was submitted, it had already paid $1.3 billion in irrecoverable “time costs” to Warner Bros. Exploring shareholders.

Rob Bonta has said he wants significant changes to the deal before agreeing to a settlement. Paramount, on the other hand, said it was open to some kind of structural remedy.

Faced with increasing pressure to litigate, Paramount is looking at a major divestment plan. According to estimates, if Paramount agrees to sell Turner Networks (Turner Networks), a subsidiary of Warner Bros. Exploration, the company could obtain approximately $8 billion in capital and certain legal remedies as part of the settlement lawsuit.

Turner Television Network is one of Warner Bros. Explorers' most valuable asset portfolios, which mainly includes channels such as TBS, TNT, and CNN. The channels generate about $2 billion in EBITDA (profit before tax, depreciation and amortization) each year, and the sales price of the business is expected to be about four times these profits. It was previously reported that Paramount is considering selling assets such as HGTV and Food Channel owned by Warner Bros. to resolve the lawsuit.

Selling Turner TV was a double-edged sword for Paramount. LightShed Partners analyst Rich Greenfield notes that Paramount's original intention in acquiring Warner Bros. Exploration was largely to integrate the two companies' huge television asset portfolios to improve operational efficiency. However, under pressure from antitrust lawsuits, sacrificing some assets to preserve the overall deal may be a price Paramount has to pay.