After launching a months-long investigation into whether the Paramount-Warner Bros. merger would harm competition, a group of state attorneys general could move forward with a lawsuit to block the $110 billion deal as soon as this month, an individual familiar with the matter confirmed to TheWrap.
Bloomberg reports that the top lawyers in about 10 states have begun drafting a complaint and are discussing the logistics of filing a potential lawsuit. Final decisions have not been made about filing or which states would ultimately join in.
California Attorney General Rob Bonta, who is investigating the deal, previously told TheWrap that “red flags are everywhere when you have a merger of this type” and that the states are prepared to “act timely,” but declined to provide a specific timeline for when a decision could be made. A spokesperson for Bonta told TheWrap on Friday that it continues to actively investigate the Paramount-WBD merger and declined to comment further.
In addition to California, states with Democratic AGs weighing a lawsuit include New York, Washington, Oregon, Nevada, Colorado, Connecticut. The top lawyer for Massachusetts, who is a Democrat, and Republican state AGs from Tennessee and Pennsylvania are also involved in the investigation, according to Bloomberg.
A spokesperson for the Connecticut AG told TheWrap they are “very concerned” about the transaction, but declined to comment on a potential lawsuit. The New York, Colorado, Washington and Tennessee attorneys general also declined to comment. Paramount and the Oregon, Nevada, Connecticut, Massachusetts and Pennsylvania AGs did not immediately return TheWrap’s request for comment.
The update comes as the deal, which has already been approved by shareholders, is on track to close by the end of the third quarter, though Paramount is internally hoping to close the merger as early as July.
The David Ellison-led media giant has met with U.S. Department of Justice officials to discuss the transaction. The DOJ’s Hart-Scott-Rodino review period expired in February, though the regulator can still get involved at anytime in the process. It has also asked the FCC to approve its foreign investment in the deal, with those investors set to account for 49.5% of the equity of the combined company.
In May, Paramount said it was cooperating with various state AGs who sent them subpoenas, or civil investigative demands, focusing on the DOJ investigation and the competitive effects of the merger. At the time, it did not disclose which or how many state AGs sent subpoenas.
In addition to U.S. federal regulators and state attorneys general, the European Commission has begun its review of the deal, with a provisional deadline set for July 7. Regulators in the U.K. are reviewing the deal, with a deadline for public comments closing at the end of April.
In the event the transaction does not close by Sept. 30, WBD shareholders will receive a 25 cent per share “ticking fee” for each quarter until closing. In the event that the deal does not close at all due to regulatory matters, Paramount will pay WBD a $7 billion termination fee.
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