Paramount Skydance faces antitrust lawsuit over Warner Bros. Discovery deal

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Paramount Skydance antitrust lawsuit

Highlights

Attorneys general from California, New York, New Jersey, and nine other states filed an antitrust lawsuit to block Paramount Skydance's acquisition of Warner Bros. Discovery.
Paramount faces daily $7 million penalty to Warner Bros. Discovery shareholders if the deal closes after September 30, prompting a fast-tracking effort.
Warner Bros. Discovery shares have fallen about 8% since late February amid deal uncertainty, while European regulators have until July 22 to review the proposal.

State challenge targets merger timetable

As reported by Business Insider, attorneys general from California, New York, New Jersey, and nine other states are suing Paramount Skydance in an effort to block the Warner Bros. Discovery acquisition on antitrust grounds. California Attorney General Rob Bonta says in a statement that combining the two companies would lead to higher prices, lower quality, and less content, harming movie theaters, cable distributors, and audiences across the U.S.

The lawsuit is widely expected after Bonta previously says his office would give any proposal for a Warner Bros. Discovery takeover a very close look. Paramount is seeking to fast-track the purchase because it has agreed to pay Warner Bros. Discovery shareholders about $7 million a day if the transaction does not close after September 30.

If completed, the acquisition would significantly expand Paramount's media holdings. The combined group would unite Warner Bros. Studio, HBO, HBO Max, and CNN with Paramount Pictures, Paramount+, Pluto TV, CBS, MTV, and other cable assets under David Ellison's company.

Regulatory approvals and market pressure build

Federal regulators have already cleared the transaction, with Donald Trump's Department of Justice approving the deal in mid-June and saying it is not likely to harm competition or American consumers in streaming, pay TV, or movie production and distribution. In Europe, regulators are still reviewing the proposal, and Paramount has already agreed to concessions including exiting the United International Pictures joint venture with Comcast's Universal Pictures.

The European Commission now has until July 22 to review the updated proposal. The deal is also drawing criticism from Hollywood figures including Ben Stiller and Mark Ruffalo, who say in a joint statement that the merger would further consolidate an already concentrated media landscape, reduce opportunities for creators and jobs, and raise costs while limiting audience choice.

Investor nerves are also showing in Warner Bros. Discovery shares. The stock, which trades partly on expectations that Paramount will pay the agreed deal price of $31 a share, is down about 8% since late February.

Our earlier coverage of the multistate antitrust challenge to Paramount’s proposed acquisition of Warner Bros. Discovery explained that a coalition led by California AG Rob Bonta was moving to block the deal over competition concerns in film distribution and cable. We noted that while federal clearance was already in place, a court fight could drag on for months and trigger hefty delay-related payments and financing risks, adding pressure to the merger timetable.

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