States expected to sue over Paramount-WBD deal despite DOJ clearance
CNBC reported that several state attorneys general may seek to block Paramount Skydance’s Warner Bros. Discovery acquisition on antitrust grounds.
By Amanda Ross · Deals Correspondent
· 3 min read
A group of state attorneys general is expected to file an antitrust lawsuit as soon as Monday seeking to stop Paramount Skydance’s planned acquisition of Warner Bros. Discovery, CNBC’s David Faber reported, citing sources. The expected case would add a state-level legal challenge to a transaction that has already received clearance from the U.S. Department of Justice and several overseas regulators.
California Attorney General Rob Bonta is expected to be among the officials joining the lawsuit, Faber reported. The case is expected to argue that the combination should be blocked on competition grounds.
The proposed transaction would join Paramount and Warner Bros., two of Hollywood’s best-known studios, and bring together the Paramount+ and HBO Max streaming services. Paramount Chief Executive David Ellison has previously said the streaming platforms would be combined after the merger.
The deal would also create the largest collection of television networks in the United States, combining CBS with Paramount-owned pay-TV channels including MTV and BET, alongside Warner Bros. Discovery properties such as CNN and TNT.
Federal approval does not end antitrust risk
The Justice Department cleared the merger in mid-June after reviewing it for federal antitrust concerns. In its determination, the department said its Antitrust Division had completed its analysis and found, based on the evidence gathered, that the transaction was not likely to harm competition or American consumers.
State attorneys general can pursue their own antitrust claims even after a federal agency has signed off on a transaction. In practice, such a lawsuit would ask a court to prevent the companies from closing the merger, or to impose conditions, if the plaintiffs can show the deal would unlawfully reduce competition.
Warner Bros. Discovery shareholders approved the merger in April. Ellison said on a recent earnings call that the transaction remained on course to close by September, CNBC reported.
The deal has also drawn scrutiny from lawmakers in the United States and Europe, including over foreign financing tied to Paramount’s offer. Several international jurisdictions have approved the merger, but the European Union is still reviewing it. A provisional European deadline has been set for July 22, and the European Commission said in a public filing this month that Paramount had offered concessions to address concerns about the transaction.
Industry concerns and deal history
Some in Hollywood have raised concerns that combining the companies could lead to fewer theatrical releases and job cuts. Ellison has said the combined studios would release 30 films a year and has said he is committed to protecting jobs.
Ellison began pursuing Warner Bros. Discovery last September, after Paramount and Skydance had completed their own merger. Paramount then made an initial approach for Warner Bros. Discovery, leading to multiple bids and a formal sale process.
Warner Bros. Discovery ultimately agreed to sell its film studio and streaming assets to Netflix. Paramount later launched a hostile takeover offer and revised its bid. Netflix dropped its agreement, and Paramount secured a deal to acquire all of Warner Bros. Discovery for $31 a share.
This story draws on original reporting from CNBC.
