Paramount Skydance Inc. is preparing for potential pushback regarding its $81 billion acquisition of Warner Bros. Discovery Inc. It seems that two liberal attorneys general might challenge the deal, claiming it infringes antitrust laws, particularly while the White House appears to be overlooking such concerns, as reported by On the Money.
According to sources, executives at the media conglomerate, led by David Ellison and his father, Larry Ellison—who has ties to Trump—“wake up every day wondering if a lawsuit is being filed against them” primarily by California AG Rob Bonta and New York’s Tish James, along with possibly other state attorneys general.
Interestingly, under U.S. antitrust law, states can sometimes override decisions made by the Justice Department, particularly if they are significant enough. California remains central to the entertainment industry, even if companies have been relocating. Meanwhile, New York is still recognized as the country’s financial hub, especially for left-leaning stakeholders.
Officials at Paramount Skydance expect a lawsuit to materialize, notably with California likely at the forefront, given the strong coalition of actors, studio leaders, and activists who object to the acquisition, fearing job losses in the process. There’s also a perception that the Ellisons have pro-Trump sentiments, which doesn’t sit well with the elite on the West Coast.
The Ellisons apparently believe in a long-term strategy in court, aiming to capitalize on their own strengths. But delays could be costly for them. They argue that a swift merger could lead to savings, ultimately resulting in more jobs and more films, something that would benefit those opposed to the merger as well. Conversely, waiting it out could lead to job cuts and other setbacks.
Representatives for Bonta and James did not provide any comments, nor did those speaking on behalf of Paramount Skydance.
As reported, investigations into the merger have already been initiated in both New York and California. After the Justice Department gave its blessing to the acquisition, Bonta expressed his discontent, labeling the approval as “shameless.” Although James comments specifically on the deal, he echoes the sentiments of critics concerned about antitrust implications of such a colossal merger.
Insiders at Paramount Skydance feel confident that antitrust issues are overstated, especially given that both Warner and Paramount are facing stiff competition.
The economic climate suggests that the merger could potentially safeguard jobs. Warner Bros. Discovery has faced challenges, including massive debt and losses due to cord-cutting, despite having produced successful films in the past year. The company has implemented significant job cuts following its own merger between Warner Media and Discovery in 2022.
The massive financial struggles were compounded with a bidding war for the company, leading to the Ellisons securing a $31-per-share deal, which is notably higher than Warner Bros. Discovery’s share price of around $8 before this bidding began. This indicates Wall Street’s skepticism about WBD’s ability to thrive as an independent entity.
So, if there isn’t a strong antitrust case, what’s behind Bonta and James’s opposition?
The short answer: politics and existing animosities.
The Ellisons are aiming to steer programming and news content toward a more central position, distancing it from the prevailing left-leaning influence at CBS, owned by Paramount. If the merger goes through, CNN would also come under their belt.
James has had ongoing conflicts with Trump, including what many considered a frivolous lawsuit against him regarding inflated property values, despite the fact that the loan in question had been repaid, and the bank had its own assessment. A left-leaning judge in New York originally ruled in favor of James, imposing a hefty fine on Trump, although that decision was later reversed. She continues to appeal, while simultaneously dealing with legal troubles of her own, including fraud allegations against her for properties she manages.
A source close to Paramount expressed frustration, stating, “They’re communists, so of course, they would oppose this deal. Ultimately, we might lose, but even if we win, can we truly expect Warner not to trim costs given the circumstances prior to the deal?”
