Concerns Arise Over Paramount-Warner Bros. Merger
Executives from Paramount and Warner Bros. Discovery are feeling uneasy as a judge may soon suspend their $110 billion merger, potentially postponing the deal for a few weeks just as a crucial deadline looms.
The companies were aiming to finalize the merger as early as next week. However, a coalition of twelve Democratic state attorneys general filed for a temporary restraining order on Monday, raising antitrust issues. According to CNN, officials expect this order to be granted, which could delay the deal by two to three weeks, putting Paramount and Warner Bros. close to their September deadline.
Despite these concerns, some executives remain optimistic about the merger’s future, especially since it already has approval from the Trump administration. One insider noted, “One way or another, the deal will be completed.”
However, if the restraining order is issued, they will be pressed against the October 1 deadline—after which a significant “ticking fee” would come into play. This fee adds 25 cents per share to the cost for every quarter the acquisition remains incomplete.
This legal entanglement also raises questions about CNN’s future ownership, creating anxiety among staff about the station’s editorial independence, particularly since David Ellison from Paramount has appointed Bari Weiss to lead CBS News.
Neither Warner Bros. nor Paramount Skydance provided comments in response to inquiries.
A lawsuit led by California Attorney General Rob Bonta argues that the merger violates antitrust laws and could lead to higher consumer prices, impacting an already troubled cinema sector. If approved, the merger would combine platforms like HBO Max, Paramount+, and CBS, along with a wide array of films and TV shows, creating a major player in the market.
The lawsuit comes shortly after reports suggested that Ellison’s advisors recommended relocating Paramount’s headquarters and reallocating $30 billion in planned spending out of California should Bonta resist the merger.
FCC Chairman Brendan Carr expressed skepticism regarding the lawsuit, labeling it “not really a legitimate antitrust case.” Meanwhile, Paramount insists that it has adequately defended against antitrust claims, noting endorsements from various international regulators and its goal of finishing the deal by the end of September.
Behind the scenes, Paramount had hoped to finalize the merger this month, confident of obtaining necessary approvals in time. Critics have speculated whether the Justice Department’s prior approval was influenced by Ellison and his father, tech billionaire Larry Ellison, who have ties with former President Trump.
The deal faces scrutiny internationally, with UK officials hinting at possible intervention, while the EU has required concessions for approval.
A federal judge in California is set to hear arguments on Friday regarding the temporary restraining orders sought by various states. If granted, it could lead to further legal battles over a preliminary injunction, delaying the merger for additional months.
Furthermore, legal challenges include a lawsuit from Paramount+ subscribers claiming the deal would increase subscription prices and reduce choices. On Tuesday, the Writers Guild of America also filed a lawsuit stating the merger could negatively affect American screenwriters by limiting Hollywood buyers.
Another lawsuit from Paramount investors alleges that David and Larry Ellison engaged in illegal agreements with the former administration to facilitate the merger, which they argue included adjustments to commitments with CNN and a $16 million settlement with CBS.
Despite these mounting legal challenges, Paramount remains determined to finalize the merger by September. Jeffrey Kessler, Paramount’s chief lawyer, mentioned on CNBC that the company “absolutely” intends to appeal if the restraining order is approved.
