Bonta’s cave on Paramount-Warner deal fits California’s history of corporate surrender

The deal that California Attorney General Rob Bonta made this week to allow the $111 billion merger of entertainment media powerhouses Paramount Skydance and Warner Bros. Discovery has a familiar ring.

It’s the latest episode of California officials confronting big corporate interests over some issue, loudly promising to make business executives change their ways and then caving in. The corporation often makes some minor concessions that allow the officials to save face.

In this case, Bonta and attorneys general from other states had filed suit contending that the Paramount-Warner deal was monopolistic, would cost consumers more, would hurt workers in a troubled industry and would concentrate ownership of broadcast news media.

When David Ellison, the Paramount boss, threatened to move his company out of California if the merger was blocked, Bonta accused him of blackmail and renewed his pledge to crack down.

However, the threat changed the dynamics. As very similar articles in the New York Times and the Wall Street Journal described it, Bonta succumbed to political pressure — some from Gov. Gavin Newsom — to compromise.

The deal contains none of the harsh conditions critics had sought and Bonta had hinted at. It did not, for instance, require Ellison, son of technology tycoon Larry Ellison, to give up any pieces of the pie, such as the CNN news channel.

At best it required the merged companies to generate about $1.5 billion in domestic film and television production over the next five years, to honor union contracts and make some investments in employees’ welfare.

The merged companies would probably have made those investments regardless of the agreement, and their cost is pocket lint compared to the merger’s massive financial stakes.

True to the history of such deals, Bonta issued statements claiming victory and pledging he would vigorously enforce the conditions.

So what are other instances of state officials backing down when confronting corporate interest?

One involves Newsom and the oil industry and is still happening. He spent months vilifying companies that provide gas and diesel fuel as price gougers, but when two companies announced plans to shut down their California refineries, raising the specter of fuel shortages and increased prices, Newsom changed his tune.

He suddenly began asking refiners what it would take to continue operations. His administration eased regulations of new oil wells and provided greenhouse gas permits to make refining less expensive.

The Paramount-Warner deal most resembles what happened after Jerry Brown began his second stint as governor in 2011.

Brown signed legislation requiring Amazon and other online sellers to collect sales taxes, responding to complaints from Walmart and other store-based retailers who already collected taxes. Amazon, which wanted to increase operations in California by building dozens of warehouses, threatened to abandon the state, and it spent millions of dollars on a referendum to overturn the tax mandate.

Those moves sparked negotiations, and the deal that emerged maintained sales taxes on online purchases, but with a one-year delay which, it later became apparent, was Amazon’s goal all along. It gained a leg up in its rivalry with Walmart as it invaded the state with warehouses to speed deliveries to its customers.

Brown claimed credit, saying the deal would “create tens of thousands of jobs and inject hundreds of millions of dollars back into critical services like education and public safety in future years.”

There are many other examples of the syndrome. Essentially, corporate interests such as Paramount take a long view of conflicts with political figures such as Newsom, Brown and Bonta. They will make minor concessions if the net result is a bottom line profit, while politicians issue press releases claiming victory, no matter how peripheral.