Paramount Skydance Chief Executive David Ellison isn’t waving a white flag.
After Paramount agreed Friday to delay its proposed merger with Warner Bros. Discovery to battle a stiffer-than-anticipated antitrust challenge from California Atty. Gen. Rob Bonta and 11 other state attorneys general, Ellison is resetting expectations. In a Monday memo to employees, Ellison wrote that he still believes his mammoth merger will be consummated in the coming months.
Paramount stock has lost about 20% of its value since the beginning of July amid concerns that the company will have to shoulder higher costs to get its $111-billion Warner Bros. acquisition across the finish line. Friday’s agreement with the state attorneys general to delay the merger’s close until after an antitrust trial, which will likely be held in 2027, also was unsettling to shareholders and some employees.
Paramount Skydance shares closed at $8.03, down 2.19% Monday afternoon.
“Let me be clear: we remain highly confident that this transaction does not pose any legal issues, and we will complete it and bring these two companies together,” Ellison wrote in the memo shared with media outlets.
Paramount’s internal teams and Warner Bros. have been diligently working to lay the groundwork for the two rival companies to integrate their operations. The rush had been on because Ellison wanted to close the deal this week — or at least by the end of September — to avoid a higher payout to Warner shareholders.
However, Paramount suspended such ambitions on Friday, agreeing to delay the merger until after a trial to litigate the merits of the antitrust case brought by Bonta and the other Democrats. Oregon, Washington, Colorado, Nevada, New Mexico, New Jersey and New York are among the states joining California in the fight.
The Writers Guild of America separately sued this month, alleging the merger would harm writers. Over the weekend, SAG-AFTRA announced that it supports the state attorneys general as they try to beat back the merger.
“Our members have every right to expect that the government will do thorough regulatory oversight when a deal of this magnitude takes place,” SAG-AFTRA President Sean Astin said in a statement.
“The workers in this industry should not have to rely on promises and aspirational statements,” he added, saying “this isn’t a conversation about shareholder value, it’s about the survival of the entertainment business in America.”
Teamsters already have spoken out against the deal.
Bonta and fellow Democrat state attorneys general have argued the deal would violate the century old Clayton Antitrust Act in three markets: wide-release theatrical films; potential blockbuster movies and cable television channel concentration.
U.S. District Judge Araceli Martínez-Olguín, who is overseeing the antitrust suit filed by Bonta two weeks ago, wrote in an order last week that the plaintiff states had presented “compelling evidence” that the proposed merger may violate U.S. antitrust law.
Paramount disputes that. The firm, controlled by the Larry Ellison family, has pointed to regulatory approvals it has already garnered, including from the U.S. Department of Justice, which found its acquisition of Warner Bros. Discovery would not harm competition.
The deal also won clearances from regulators representing 65 jurisdictions, including Australia, China, the European Commission, Germany, France, Spain and Canada. Paramount has pointed to those approvals as proof that the law is on its side.
In his memo, Ellison said delaying the deal until after a trial before Martínez-Olguín made sense.
“We believe this is the right path because the facts and the law are on our side, and a full hearing will demonstrate why the plaintiffs’ arguments should not prevail,” Ellison wrote.
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