A group of state attorneys general have hit Paramount Skydance with various subpoenas as they investigate the company’s pending $110 billion merger with Warner Bros. Discovery, according to a 10-Q filing with the U.S. Securities and Exchanges Commission.
The filing states that the subpoenas, or civil investigative demands, focus on the investigation by the Department of Justice and the competitive effects of the merger. It does not disclose which or how many state AGs sent subpoenas.
California Attorney General Rob Bonta, who is conducting his own review of the deal and weighing potential legal action, previously told TheWrap that “red flags are everywhere when you have a merger of this type.” At the time, he added that state AGs are prepared to “act timely,” but declined to provide a specific timeline for when a decision could be made.
“We have been cooperating with the state attorneys general in responding to their requests,” Paramount said.
The disclosure comes as Paramount executives previously said that the expiration of the DOJ’s Hart-Scott-Rodino review period leaves “no statutory impediment” to closing the deal, though the agency can still get involved in the regulatory process between now and closing.
In addition to the action by state AGs, Paramount said it received a demand letter from a shareholder requesting to inspect its books and records as they investigate “possible breaches of fiduciary duties or other misconduct” in connection with the financing of the merger.
It is also facing an antitrust suit that was filed in California and a separate complaint filed in New York alleging its proxy statement contains “materially false and misleading statements and omissions concerning the transaction process, the valuation of WBD, and alleged conflicts of interest of WBD’s directors and financial advisors.”
While the merger has secured shareholder approval, it still remains subject to regulatory approval.
Regulators in the U.K. are gearing up to begin their review of the deal, with its deadline for public comments closing just last week. Paramount 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.
The Paramount-WBD deal is on track to close by the third quarter. If the deal is not closed 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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