California Attorney General Rob Bonta’s effort to stop Paramount Skydance’s acquisition of Warner Bros. Discovery has suddenly become a fight between states — and Iowa and Montana are asking the United States Supreme Court to intervene.
Iowa Attorney General Brenna Bird and Montana Attorney General Austin Knudsen filed a motion Wednesday asking the Supreme Court to halt the antitrust lawsuit being pursued by Bonta and 11 other states against the proposed Paramount-Warner Bros. Discovery merger.
The filing represents a dramatic escalation in a battle that was already becoming increasingly contentious after Bonta abruptly canceled planned settlement discussions with Paramount earlier this week.
According to TheWrap, Bird and Knudsen are accusing California’s coalition of effectively vetoing a transaction that they say has already been approved by federal officials and regulators across 68 jurisdictions around the world.
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Their filing describes Bonta’s case as “politicized” antitrust enforcement and argues that California and its allies should not be allowed to stop a nationwide transaction that other states believe would benefit their own residents and economies.
In other words, Bonta is no longer simply dealing with Paramount.
Other states are now challenging California’s right to hold up the deal at all.
Iowa and Montana Go Straight to the Supreme Court
Bird and Knudsen are asking the Supreme Court to prevent Bonta and the other 11 attorneys general from obtaining an injunction against the Paramount-Warner Bros. Discovery transaction and to stop them from continuing their federal antitrust lawsuit.
The states are also asking the Court to declare that the merger does not violate the Clayton Act.
“This case is about the legal limits on politicized antitrust enforcement by a small handful of states seeking to enjoin a $110 billion merger that the United States, most American states, and competition regulators worldwide have cleared,” Iowa and Montana argue in the filing.
Their argument is particularly interesting because Iowa and Montana contend that the dispute has effectively become a disagreement between sovereign states.
Panorama of the west facade of United States Supreme Court Building at dusk in Washington, D.C., USA. Photo Credit: Joe Ravi, CC BY-SA 3.0 <https://creativecommons.org/licenses/by-sa/3.0>, via Wikimedia Commons
The two states believe the merger would benefit their economies. California and its coalition believe the transaction is illegal and should be stopped. Bird and Knudsen therefore argue that the Supreme Court is the proper venue to resolve that interstate dispute.
Front Office Sports reports that Bird accused California of attempting to become “the country’s regulator” and said the state does not get to determine what Americans elsewhere in the country are allowed to watch or stream.
Iowa and Montana have asked the Court to require a response from Bonta’s coalition by September 15 and hold a conference on the matter on October 9.
California has so far offered little publicly in response.
Paramount Pictures Logo – YouTube, ClosingLogosHD
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“We are reviewing the filing and will respond as appropriate,” a spokesperson for Bonta’s office told TheWrap.
Importantly, none of this means the Supreme Court has agreed to take the case. The justices could decline to intervene entirely. The Court is also currently out of session until October.
Nevertheless, the filing adds an entirely new legal front for Bonta and his coalition at precisely the moment settlement negotiations with Paramount have broken down.
Bonta and Paramount Aren’t Talking
Just days ago, it appeared Bonta and Paramount CEO David Ellison might finally be approaching the negotiating table.
That meeting never happened.
Bonta canceled Monday’s planned discussions after accusing Paramount of leaking and misrepresenting details from confidential preliminary settlement conversations.
Paramount denies being responsible for those leaks.
As of Tuesday, there were no new negotiations scheduled.
David Ellison in an interview with Bloomberg – YouTube, Bloomberg Podcasts
Reuters reported that Bonta remains willing to meet with Paramount if he believes the company is participating sincerely and in good faith.
“If they are willing to clean things up … and engage in a way that is sincere and in good faith, we will be where we always will be with any party in any case that we’re involved in, which is happy to meet,” Bonta said.
Paramount has maintained that it remains interested in reaching a deal.
That still leaves the two sides at an impasse, and Bonta has now made it increasingly clear that merely offering additional promises about how Paramount will operate after the merger will not satisfy him.
Bonta Wants Structural Concessions
Ellison has already attempted to ease concerns surrounding the transaction by promising that the combined company would release 30 theatrical movies annually and maintain meaningful theatrical windows.
Bonta says that’s not enough.
The California attorney general has specifically said his coalition is not interested in relying primarily upon behavioral remedies — promises about what a merged Paramount-Warner Bros. will or will not do.
He wants structural changes.
California Attorney General Rob Bonta – YouTube, KCRA 3
In an interview with TheWrap, Bonta offered perhaps his clearest description yet of what that could mean.
The combined company would control roughly 50 basic cable channels, and Bonta said separate ownership of a “significant” number of those channels could represent the type of structural remedy his coalition is seeking.
That could mean actual asset sales.
The Wall Street Journal has also reported that Bonta is interested in keeping Paramount and Warner Bros.’ respective movie studio operations separate rather than fully integrating them.
That would strike directly at some of the efficiencies and synergies Paramount hopes to create through the acquisition.
And it raises the obvious question surrounding one particularly politically charged asset.
CNN Remains the Wild Card
CNN continues to hover over the entire Paramount-Warner Bros. fight.
Bonta has repeatedly insisted that his lawsuit is an antitrust matter and not an effort to protect CNN from Ellison, whose family has ties to President Trump.
But when TheWrap directly asked Bonta which cable channels he might want placed under separate ownership, the attorney general refused to identify them.
“We have some thoughts on [specific channels],” Bonta said. “I’m not going to share those with you.”
A screenshot from CNN – YouTube, CNN
Bonta stopped short of saying CNN must be sold and there’s currently no confirmation that California is demanding CNN be divested. However, CNN has undeniably become one of the most closely watched assets in the negotiations.
TheWrap reported Tuesday that potential buyers and investment bankers are already examining assets that could conceivably be sold as part of a settlement, including Warner Bros. Discovery cable networks and New Line Cinema.
The outlet noted that a potential CNN sale has become a significant topic surrounding the litigation, although Paramount reportedly does not want to part with the network.
A CNN Report on President Trump – YouTube, CNN
For now, it remains speculation to suggest Bonta will ultimately demand CNN’s sale.
But as long as Bonta refuses to identify which of the approximately 50 cable channels he believes should be separately owned, the CNN question is not going away.
The Clock Is Becoming Very Expensive for Paramount
Bonta has leverage because time is costing Paramount an extraordinary amount of money.
Beginning October 1, Paramount is scheduled to begin paying Warner Bros. Discovery shareholders a ticking fee of approximately $650 million per quarter if the transaction remains unfinished.
That works out to roughly $7 million per day.
If regulatory action ultimately prevents the merger from closing at all, Paramount could also face a $7 billion breakup fee.
Meanwhile, the antitrust trial is not scheduled to begin until March 2027.
Paramount Skydance CEO David Ellison being interviewed – YouTube, CNBC Television
Paramount has agreed not to close the merger until five days after the trial outcome or June 1, 2027, whichever comes first, while the merger agreement itself is set to expire on June 4.
That creates an enormous incentive for Ellison to find another route out of the standoff.
Bonta knows it, but California is facing pressure of its own.
Gov. Gavin Newsom, Los Angeles Mayor Karen Bass, California gubernatorial candidate Xavier Becerra, the Directors Guild of America, and IATSE have all reportedly pushed for some form of negotiated resolution rather than allowing the fight to continue indefinitely.
Ellison has also raised the possibility of moving Paramount operations out of California if the dispute cannot be resolved, something Bonta has described as “blackmail.”
Bonta’s Merger Fight Just Became Much Bigger
What began as a California-led antitrust challenge is rapidly evolving into something much larger.
Bonta is demanding significant changes to Paramount’s proposed Warner Bros. Discovery acquisition. Paramount is facing hundreds of millions of dollars in additional costs if the transaction remains stalled. Settlement discussions have collapsed for the moment.
And now Iowa and Montana are arguing that California should never have the power to effectively stop the transaction for the rest of the country in the first place.
Logos for Paramount Skydance and Warner Bros. – Paramount, WB
That puts three possible endgames on the table.
Paramount and Bonta could return to negotiations and reach a settlement that involves significant asset divestitures. The Supreme Court could choose to intervene in the interstate dispute. Or the entire fight could continue toward the currently scheduled March 2027 antitrust trial.
The Supreme Court is far from guaranteed to give Iowa and Montana what they want. But Bonta’s attempt to stop Paramount just acquired two new opponents — and they have taken the fight to the highest court in the country.
Who do you think will ultimately prevail in the battle between Bonta and Paramount? Sound off and let us know!
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