* AG says his office has central role in protecting
Hollywood jobs
* Behavioral remedies not always adequate to protect
competition, AG says
* Paramount has said deal will create jobs
By Jody Godoy and Nathan Frandino
June 5 (Reuters) - California Attorney General Rob Bonta
will soon decide whether to sue to block Paramount's
$110 billion acquisition of Warner Bros, he told Reuters
in an interview, adding that in general he views any corporate
promises to address antitrust concerns as better when backed up
by potential divestitures.
Bonta's office has been reviewing the deal for potential
violations of U.S. antitrust law, as movie theater owners,
Hollywood actors and others have expressed concerns that it
would decrease competition across the industry, leading to lower
wages, higher prices and fewer options for consumers and content
buyers.
Antitrust authorities in Europe are set to decide by early July
whether to clear the deal, while the U.S. Department of Justice
is likely to reach a decision soon, according to a source
familiar with the matter. The deal could close once it clears
those reviews, putting time pressure on Bonta's office, which is
seen as the most likely enforcement agency to challenge the
deal.
"There's not a lot of time left before we will need to act
if that's what we decide to do," Bonta said in an interview in
Oakland, California.
The combination of two major U.S. film studios has elicited
angst in Hollywood over the potential for fewer productions.
Bonta said his office has heard from many workers in the
industry and that their concerns have raised "even more red
flags."
Antitrust enforcers can challenge mergers that would
significantly harm competition, including competition among
employers for specialized labor.
"We think we have a central role in being able to protect
jobs in Hollywood with respect to the Paramount-Warner Brothers
proposed merger," Bonta said.
A Paramount spokesperson said the company has "every
economic incentive" to expand production after the merger in
order to grow streaming service subscriptions. Paramount CEO
David Ellison has vowed that the combined company will release
30 movies per year in theaters. The company views theatrical
releases as key to marketing its streaming offerings, it
recently said in court papers.
Asked whether Paramount should be required to spin off any
parts of its business to protect competition, Bonta said that
behavioral remedies, where companies agree to take particular
actions, are not always adequate.
"Can they be part of a solution? Maybe. Should they be
backed, if they're even pursued at all, by a structural remedy
consequence if they're not adequate? I'd say so. That's kind of
the way I'm thinking about it," he said.
Paramount Chief Legal Officer Makan Delrahim said in a
statement that the company is "always prepared to remedy
legitimate and articulated violations of the antitrust laws,"
but that it believes the deal presents none.
STATES TEAM UP TO TAKE ON ANTITRUST
California's Department of Justice has the largest antitrust
division in the country, with just under 50 people. And the
state is adding eight more attorneys this year along with eight
support staff, Bonta said. California Governor Gavin Newsom has
proposed adding $14.3 million to Bonta's budget for antitrust
work.
A number of other states are talking to California about a
joint challenge to the deal, two people familiar with the matter
said.
However, there was no indication that the states have come
to an agreement on their approach. The potential costs involved
if California hires an outside lawyer could be a factor for
states, the sources said.
"The full range of options are on the table and available and
are fully resourced, no matter what we decide," Bonta said when
asked if the state was prepared to take action on its own.
California has worked with both Democratic and Republican-led
states on major antitrust cases in the past, including a recent
win against Live Nation.
Working together is more important now that the Trump
administration is "picking winners and losers based on who their
friends are," Bonta said.
But antitrust cases often cost tens of millions of dollars,
raising questions about how many major lawsuits the states can
bring without their federal partners.
"We will find a way, either we'll go back and ask for more
money, we'll all pitch in enough resources, we'll hire outside
counsel, whatever it takes," Bonta said. "I think the people of
our states and the people of this country want that, and I know
they deserve that."