Paramount-WBD Merger Talks Heat Up as Iowa Joins Supreme Court Challenge

Paramount and state attorneys general are talking, but a deal to resolve the antitrust fight over the $111 billion Warner Bros. Discovery merger is far from done. Sources familiar with the discussions say the conversations between Paramount CEO David Ellison's team and California Attorney General Rob Bonta's office are preliminary, focused on setting the agenda for court-ordered settlement talks scheduled for October 14-15 in San Francisco.

“This is part of the process before you get the principals onboard, it's pretty straightforward,” a source with direct knowledge told Deadline. “The end is not nigh.”

The news comes as Iowa and Montana push to take the antitrust case directly to the U.S. Supreme Court, arguing the lawsuit filed by a dozen Democratic attorneys general threatens the deal and could have national economic consequences.

What is the Paramount-WBD merger dispute about?

Twelve state attorneys general, led by California's Bonta, filed an antitrust lawsuit against Paramount and Warner Bros. Discovery on July 13, challenging the mega-merger that had already been approved without conditions by the Trump administration's Department of Justice and other major jurisdictions.

The states' complaint centers on concerns about consolidation in both film and TV studios and cable network concentration. Bonta has rejected a “behavioral remedy” like releasing at least 30 films per year, and speculation centers on whether some of the 50-plus cable networks could be moved out of the combined portfolio to satisfy antitrust concerns.

The trial is set for March 2, 2027, but the legal fight has been marked by sharp rhetoric. Bonta has accused Paramount of “playing games” and leaking settlement discussions, while Paramount has threatened to move operations to a red state if the merger is blocked.

Why is Iowa involved in the Paramount merger case?

Iowa and Montana filed a motion to take the validity of the antitrust suit to the Supreme Court, arguing that the case raises fundamental questions about the limits of state authority over interstate commerce. The blue state attorneys general must respond to that motion by September 25.

For Iowa, the case represents a broader fight about federalism and whether a handful of states should be able to block a merger that federal regulators already approved. The outcome could set a precedent for how state attorneys general use antitrust law to influence national business decisions.

Paramount has also requested a $1.88 billion bond from the plaintiffs to cover “extraordinary losses” the company anticipates from a ticking fee of $7 million per day owed to Warner Bros. Discovery shareholders starting October 1. A hearing on that request is scheduled next week in Oakland.

What would a settlement look like?

Core to the settlement discussions are scenarios where Paramount would operate the film and TV studios of Paramount and Warner Bros. separately, at least for a period after the deal closes. Cable network concentration remains a key sticking point, with some speculation that networks could be divested to avoid antitrust limits.

Shares in Paramount jumped 5% in after-hours trading Friday following a Wall Street Journal report that the company was in “advanced talks” with Bonta's office. Warner Bros. Discovery stock rose 6% after hours. Both stocks are down for the year, with Paramount down 23% in 2026 amid uncertainty about the merger's fate.

Pressure mounts on California AG to settle

High-profile California Democrats, including Gov. Gavin Newsom and Los Angeles Mayor Karen Bass, have publicly pressured Bonta to settle the case. They fear damage to the entertainment industry and the state's economy if the deal remains pending.

An Economic Development Corporation report delivered to Los Angeles County warns the debt-laden merger could cause thousands of job losses. However, the same report, which Paramount commissioned, says the combined company could bring jobs and productions to the region if the deal goes through.

Paramount had “no comment” on whether negotiations with the attorneys general are ongoing. Bonta's office said: “Potential settlement talks are confidential. We cannot confirm or deny whether settlement talks are occurring or their alleged substance.”

What happens next in the Paramount merger fight?

The two-day settlement conference in San Francisco will be a key test of whether the parties can find common ground. But insiders caution against expecting a quick resolution.

“I get why some want this to look bigger than it is, there's a lot of pressure here,” one insider said. “This is too big, too much on the line for anyone to rush a deal. Hold your horses. No one wants to waste anyone's time.”

With the ticking fee set to start October 1, the pressure on Paramount to resolve the case is mounting. But with Iowa and Montana pushing for Supreme Court review and a trial date set for spring 2027, the legal battle could stretch on for months.

Photo: Deadline