A group of US states could move as soon as next week to block Skydance’s proposed $110 billion purchase of Paramount Warner Bros. Discovery setting up a potential antitrust showdown over one of the biggest media mergers in recent memory State regulators are investigating whether the deal could substantially reduce competition across the entertainment film and media industries
According to Reuters, California Attorney General Rob Bonta is leading a multi-state probe into the proposed deal. The investigation is examining whether the merger would violate antitrust laws by combining two of Hollywood’s biggest studios and concentrating too much power in one media giant. A spokesperson for Bonta’s office declined to comment on the possible litigation.
The transaction would join two of Hollywood’s most established film and television businesses, Paramount Pictures and Warner Bros., under the umbrella of Paramount Skydance, led by Chief Executive Officer David Ellison. It would also combine major media assets, including broadcasting, cable television and streaming businesses, to create one of the world’s largest entertainment companies.
There’s been plenty of criticism of the merger from different parts of the entertainment business. Actors, writers and other Hollywood professionals worry the consolidation will lead to fewer jobs, fewer buyers for film and TV projects and less opportunity for creative talent.
The deal has also been opposed by theatre owners, who say the merger of Warner Bros, which is behind Harry Potter and Superman, and Paramount Pictures could mean fewer films released and less choice for consumers.
Paramount has rejected those concerns, maintaining that the merger is necessary to compete in an increasingly fragmented media landscape. The company has argued that combining resources would strengthen its ability to compete for audiences, talent and investment against global streaming and technology giants. Ellison has previously sought to reassure cinema operators by stating that the merged studios would release around 30 films annually.
The legal threat comes despite the transaction receiving approval from federal antitrust authorities last month. However, state attorneys general retain independent authority to challenge mergers even after federal clearance. Analysts have noted that California, New York and several other states have been taking a more active role in antitrust enforcement in recent years.
Separately, Oregon Attorney General Dan Rayfield is seeking additional time to investigate the deal and has asked a court to delay closing by 60 days while his office reviews documents related to the transaction. Paramount has informed the court that it does not intend to close the acquisition before July 22.
Any delay could prove expensive for Paramount. Reuters reported that the company has agreed to pay Warner Bros. Discovery shareholders a 25-cent-per-share “ticking fee”, amounting to roughly $650 million every quarter, if the transaction is not completed before October. The company is also expected to carry approximately $80 billion in debt following the merger.
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