California Attorney General Rob Bonta's office cancelled a planned Monday meeting with Paramount Chief Executive David Ellison where the parties were expected to discuss settling a lawsuit the state led seeking to block the company's purchase of Warner Bros. Discovery.
California and 11 other states filed an antitrust suit last month to block an $81 billion deal to combine Paramount and Warner, a transaction that would bring together two of Hollywood's biggest producers and distributors of entertainment and news content.
Bonta was expected to ask Paramount to divest some cable channels and commit to keeping its movie studio separate from Warner Bros., The Wall Street Journal reported. Lawyers from the two sides met last Friday to set an agenda and talking points for the two sides, the Journal reported.
Bonta said in a statement that he scrapped the planned Monday meeting and accused Paramount of failing to "maintain the confidentiality" of Friday's gathering.
"Not only did Paramount leak the alleged substance of settlement discussions, but they misrepresented these discussions, demonstrating a lack of good faith," Bonta said. "As soon as Paramount stops playing games and engages sincerely, my office is happy to meet again."
He has said he is seeking structural changes in the deal, which he has called illegal.
The meeting was scheduled after California Gov. Gavin Newsom, Los Angeles Mayor Karen Bass and others urged Bonta to try to avoid a trial and find a settlement. Bonta's decision to scrap the meeting was earlier reported by the New York Times.
Bonta has said the deal will "lead to higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately, audiences on every sofa and movie theater seat in the U.S."
Paramount meanwhile has expressed little appetite for making major changes to the deal. The company has said the deal is needed so the combined Paramount and Warner can better compete with deep-pocketed tech giants such as Amazon.com and Apple as well as Netflix and Disney.
The suit, Paramount has said, misrepresents the current state of the entertainment industry, particularly because it is not considering the streaming marketplace in its evaluation of competition and market share.
Paramount has said it will be prepared to move its operations from California to a friendlier state such as Tennessee in October if it can't reach an accord with California and the other 11 states.
Ellison is under pressure to get the deal closed by Oct. 1, which is when the company is obligated to pay a "ticking fee" to Warner shareholders of roughly $650 million a quarter until the deal is completed. Earlier this month, U.S. District Judge Araceli Martínez-Olguín said that the antitrust trial would begin March 2.
Last week, Paramount asked a federal judge to require the states and the Writers Guild of America, which is also suing to block the deal, to put up a nearly $1.9 billion bond for challenging the acquisition, money that would go to the company if it ultimately wins the case.
Paramount has said the suit should be dismissed because it "distorts settled antitrust law and is based on a misrepresentation of competition in the entertainment industry today."
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