California to seek TV channel sales from Paramount: Report

California Attorney General Rob Bonta is expected to ask Paramount to divest some TV channels and keep its movie studio separate from Warner Bros. as conditions for approving the $81 billion merger, according to a report by The Wall Street Journal on Sunday.

Bonta and Paramount CEO David Ellison are scheduled to meet Monday to discuss potential settlements to an antitrust lawsuit filed last month by California and 11 other states seeking to block the merger.

Lawyers for both sides met Friday to prepare for the talks, including discussions about Paramount’s cable and film businesses, according to the report.

The states argue the deal would create excessive concentration in theatrical movies and cable television, while also raising concerns about film and television production and employment.

Pressure is growing for the sides to reach an agreement. California Gov. Gavin Newsom and Los Angeles Mayor Karen Bass have recently urged them to find common ground.

Paramount faces significant financial pressure to close the transaction. Warner’s agreement includes a “ticking fee” requiring payments of about $650 million per quarter to Warner shareholders beginning Oct. 1. If the trial proceeds as planned, Paramount could owe more than $1 billion.

Paramount has also indicated it could leave California if no agreement is reached before the fee begins, with Tennessee reportedly its preferred alternative.

Bonta has insisted on structural remedies, while Paramount has committed to 30 theatrical releases annually but has resisted selling assets or accepting management restrictions that could reduce merger-related savings.