US states' lawsuit delays Paramount's purchase of Warner Bros. Discovery
Paramount Skydance's proposed $110 billion purchase of Warner Bros. Discovery is being delayed by an antitrust lawsuit filed by the attorneys general of 12 US states. California Attorney General Rob Bonta is playing a leading role in the legal challenge, and the hearing is scheduled for March, CNBC reports.
According to the outlet, Paramount has received approval from all global regulators, including the Antitrust Division of the US Department of Justice. The states' lawsuit remains the final legal obstacle to completing the deal. The delay could increase the company's costs: after September 30, Paramount must make a deal-mandated delay payment to WBD shareholders.
Settlement negotiations
The parties had stated that they were ready to reach an out-of-court agreement. At the same time, Bonta said that a settlement would require “substantial structural remedies.” According to his office, a meeting scheduled for Monday was canceled after media reports emerged about negotiations and possible deal terms, including the divestiture of some pay-TV networks.
A Bonta representative said that Paramount was allegedly involved in the information leak and that this indicated a lack of good faith. The company denied being the source of the leak and said it was prepared to continue negotiations in good faith. Paramount had previously provided Bonta's office with a list of possible concessions, but their content was not publicly disclosed.
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Positions of the parties
Bonta said that Paramount had raised the streaming market, CNN, and the positions of foreign regulators instead of the three markets described in the states' antitrust lawsuit. The states believe that combining the assets would create excessive concentration in the film and television markets.
The Wall Street Journal reported that the state prosecutors sought the divestiture of some pay-TV networks. Following the merger, the company's portfolio would include, among others, Nickelodeon, MTV, BET, TNT, CNN, TBS, and Discovery Channel, as well as the CBS television network.
Paramount insists that greater scale is needed to compete with major streaming platforms and technology companies. Bernstein analysts noted that the company's size alone does not prove its market dominance. In their assessment, the combined company would control approximately 27% of US theatrical film releases and about 30% of blockbuster distribution.
Paramount Skydance CEO David Ellison also offered movie theaters contracts guaranteeing the release of at least 30 films a year with a 45-day theatrical window for at least three years. If the deal is completed, the combined company's total debt will amount to nearly $80 billion.
