The state of California is leading an effort to prepare a possible lawsuit that could thwart Paramount Skydance Corp.’s planned acquisition of Warner Bros. Discovery, a potential obstacle for the $111 billion deal.
The lawsuit, which could be filed as early as this month, would likely involve multiple states, according to a source familiar with the deliberations who was not authorized to comment publicly.
The litigation would seek to challenge the proposed merger on antitrust grounds, arguing it would thwart competition, lower wages and lead to widespread job losses.
“The Paramount acquisition of Warner Brothers remains an active investigation, and we do not have any updates to share at this time,” said California Atty. General Rob Bonta’s office in a statement.
In a statement, Paramount said it “will continue to fight against any attempt to derail a deal that plainly benefits consumers, creators and the industry as whole.”
“Opposing this deal means opposing expanded consumer choice, new opportunities for creators and workers, and greater competition throughout the creative ecosystem — the opposite of what antitrust law is meant to achieve,” the company added.
Warner Bros. Discovery shareholders in April approved the sale of the company to Paramount after Netflix dropped out of the auction.
Under Paramount Chairman David Ellison’s proposal, Warner investors would receive $31 a share, nearly four times the price of the company’s stock in April 2025. He also said he will keep both studios’ release schedules of 15 movies a year for a total of 30 films a year.
Nonetheless, Ellison and his team have vowed to make $6 billion in cuts following the merger, which requires regulatory approval. The combined company would have to contend with $79 billion in deal debt.
The prospect of substantial job cuts during a period of downsizing in Hollywood has ignited widespread opposition to the sale.
Thousands of people who work in the TV and film industry, including actor Joaquin Phoenix and director-writer-producer JJ Abrams signed an open letteropposing Paramount’s planned acquisition of WBD, saying it would lead to fewer production jobs and fewer choices for consumers. Others have also raised concerns about the impact it could have on content.
“The consequences would be felt nationwide, from destroying CNN the way that Ellisons have devastated CBS to entertainment industry job losses and consumers losing access to independent voices and a competitive market,” said Norm Eisen, executive chair of Democracy Defenders Fund, one of the groups that organized the open letter. “State attorneys general have both the authority and the responsibility to act when a transaction of this scale directly threatens the public’s interest, and I hope states across the country will join any effort to challenge this deal,” Eisen said in a statement.
The potential lawsuit, first reported by Bloomberg and Reuters, is being considered by other states, including New York and Colorado.
“Paramount and Warner Bros. haven’t cleared regulatory scrutiny,” Bonta told The Times in March. “My office has an open investigation into [the deal] and we intend to be vigorous in our review.”
Despite the potential obstacle, Raymond James equity analysts said in a note on Thursday that they “still believe the deal is likely to close.”
Last month, Paramount hired antitrust attorney Jeffrey Kessler to defend its planned acquisition of Warner Bros. Discovery. Kessler recently led a case for state attorney generals against concert promoter and ticketing firm Live Nation, resulting in a win for states, including California.
“We also think there are win/win solutions to be had particularly in California given exodus of production from CA in recent years and efforts to bring production back to Hollywood,” the analyst said in their note.
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