Paramount Skydance CEO David Ellison’s Warner Bros. Discovery Bid Faces Challenges

Paramount Skydance CEO David Ellison’s effort to acquire Warner Bros. Discovery is nearing its conclusion. The Justice Department recently approved the $110 billion merger. Paramount expressed its intention to complete the merger swiftly.

However, California Attorney General Rob Bonta stated that the merger remains under investigation by his office. Inside the entertainment industry, there is significant focus on Bonta and other state attorneys general who might challenge the merger using state and federal anti-monopoly laws. New York Attorney General Letitia James is also examining the deal, with reports of other states involved.

According to Scott Wagner, co-head of antitrust practice at Bilzin Sumberg, state attorneys general have the authority to challenge mergers independently. Bonta’s and James’ offices have declined to comment on any potential legal actions.

The merger would combine Paramount and Warner, consolidating two historic studios, two streaming platforms, and numerous cable assets under Ellison, whose father is Oracle co-founder Larry Ellison. This includes the unification of CBS News and CNN.

Concerns have emerged within Hollywood. Many professionals fear the deal will reduce content buyers, limit job opportunities, and increase consumer costs. Over 5,500 industry members, including prominent figures like JJ Abrams and Jane Fonda, have signed an open letter in opposition.

Free Press, an advocacy group, argues that attorneys general have strong grounds to oppose this. They and many entertainment professionals have voiced concerns about the merger’s implications.

The Justice Department’s antitrust division released a detailed statement reassuring that the deal wouldn’t harm competition or consumers. Paramount promotes the merger, claiming it fosters competition and promises 30 movies annually for theaters.

To counter possible legal challenges from state attorneys, Paramount has enlisted Jeffrey Kessler, a seasoned litigator, to defend the merger’s legality. Kessler contends no valid antitrust issues exist with the merger.

Wagner notes state attorneys have various tools beyond litigation, such as issuing information requests, to delay the merger. These actions add pressure, affecting timing and costs.

Bonta, who seeks re-election, previously criticized the Trump administration for insufficient antitrust enforcement. Attorneys general like Bonta are responding more aggressively to fill this perceived gap.

California and New York, part of a broader state coalition, succeeded in a case against Live Nation and Ticketmaster, highlighting state-level action against monopolies.

The European Union and the UK’s antitrust authority are scrutinizing the merger’s financial backing, adding another layer of examination.

Paramount aims to conclude the deal soon. The company faces a financial penalty of over $600 million per quarter if the transaction isn’t finalized by the end of September, motivating a swift closure.