Paramount Skydance-Warner Bros. Discovery merger faces state antitrust challenge in U.S.

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Paramount-Skydance merger antitrust

Highlights

A group of state attorneys general led by California AG Rob Bonta is expected to file an antitrust lawsuit as early as Monday to block the Paramount-Warner Bros. Discovery merger.
The U.S. Department of Justice and multiple global regulators approved the deal, but the European Union continues to review it with a provisional deadline of July 22 after Paramount's concessions.
Paramount secured a deal to acquire all of Warner Bros. Discovery for $31 per share, after outbidding Netflix following Warner Bros. Discovery's initial asset sale agreement with Netflix.

State legal challenge emerges before planned close

As first reported by CNBC’s David Faber, a group of state attorneys general is expected to file a lawsuit seeking to block the merger on antitrust grounds. The complaint could come as soon as Monday, and people familiar with the matter say California Attorney General Rob Bonta is expected to be part of the group.

The proposed transaction would combine Paramount and Warner Bros. film operations, along with streaming services Paramount+ and HBO Max. Paramount CEO David Ellison previously says the two streaming platforms would become one after the merger.

The deal also would create the largest portfolio of TV networks in the U.S., bringing together CBS, MTV and BET with Warner Bros. Discovery assets including CNN and TNT. Warner Bros. Discovery shareholders approve the merger in April, and Ellison says on a recent earnings call that the transaction remains on track to close by September.

Approvals advance, but industry concerns remain

The U.S. Department of Justice signs off on the merger in mid-June, saying its review finds the transaction is not likely to harm competition or American consumers. Several other global jurisdictions also approve the deal, although the European Union is still reviewing it, with a provisional deadline set for July 22 after Paramount submits concessions to address concerns.

The transaction continues to draw scrutiny from lawmakers in the U.S. and Europe, including over foreign funding linked to Paramount’s offer. Hollywood figures also raise concerns that the combination could lead to fewer film releases and job losses, while Ellison says the merged studios would release 30 movies a year and that he is committed to protecting jobs.

The path to the agreement is contested. Warner Bros. Discovery ultimately signs a deal to sell its film studio and streaming assets to Netflix, but Paramount later launches a hostile bid, revises its offer, and reaches an agreement to buy all of Warner Bros. Discovery for $31 per share after Netflix exits.

Our earlier coverage of the UK’s subdued IPO market highlighted how low valuations are fueling a surge in overseas takeovers of London-listed companies, with bidder competition pushing prices higher in some cases. We also noted that policymakers and market participants are debating reforms to strengthen London’s appeal as capital increasingly shifts toward cross-border dealmaking rather than new listings.

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