States expected to sue over Paramount-Warner Bros. Discovery deal
A planned state challenge would test a media merger already cleared by the Justice Department but still under European review.
By Daniel Okafor · Business Editor
3 min read
A group of state attorneys general is expected to sue to stop Paramount Skydance’s planned purchase of Warner Bros. Discovery, CNBC’s David Faber reported. The expected case matters because it would put state antitrust officials at odds with a deal already cleared by the U.S. Department of Justice.
The lawsuit could be filed as soon as Monday and is expected to include California Attorney General Rob Bonta, according to Faber’s report. CNBC reported that the states are expected to argue the transaction should be blocked on antitrust grounds.
The proposed deal would bring together two major Hollywood studios, Paramount and Warner Bros., along with their streaming services, Paramount+ and HBO Max. Paramount CEO David Ellison has said the two streaming platforms would be combined after the merger, according to CNBC.
The transaction would also create the largest U.S. collection of television networks, CNBC reported. That group would include CBS, MTV and BET from Paramount alongside CNN, TNT and other Warner Bros. Discovery channels.
Federal approval already granted
Warner Bros. Discovery shareholders approved the transaction in April, according to CNBC. Ellison later said on an earnings call that the companies were still aiming to close the deal by September.
The Justice Department approved the merger in mid-June after reviewing it for antitrust issues, CNBC reported. In its determination, the department said its antitrust division had completed its review and found, based on the evidence it gathered, that the deal was not likely to harm competition or U.S. consumers.
The merger has also received clearance from several jurisdictions outside the United States, according to CNBC. The European Union has not yet finished its review.
The European Commission said in a public filing this month that Paramount had offered concessions intended to address concerns about the deal, CNBC reported. The EU’s provisional deadline for a decision is July 22.
Industry concerns and deal history
Lawmakers in the United States and Europe have scrutinized the transaction, including questions tied to foreign financing in Paramount’s offer, according to CNBC. In Hollywood, CNBC reported that some have raised concerns that the combination could reduce the number of movies released and lead to job cuts.
Ellison has said the combined film studios would release 30 movies a year and has said he is committed to protecting jobs, CNBC reported.
The path to the agreement began after Paramount and Ellison’s Skydance completed their own merger, according to CNBC. Ellison first pursued Warner Bros. Discovery last September, leading to multiple bids and a formal sale process.
Warner Bros. Discovery at one point agreed to sell its studio and streaming assets to Netflix, CNBC reported. Paramount then made a hostile takeover offer and later changed its bid; Netflix dropped its agreement, and Paramount ultimately reached a deal to buy all of Warner Bros. Discovery for $31 a share.
If the states file the expected lawsuit, it would add a new legal hurdle even after federal antitrust clearance. CNBC reported that the state case is expected to seek to block the merger before the companies can complete it.
This story draws on original reporting from CNBC.