Paramount sticks to September target for Warner Bros. Discovery deal
Paramount lawyer Jeffrey Kessler told CNBC the company is still aiming to close the merger by late September as states press an antitrust challenge.
By Sal Moretti · Money Reporter
3 min read
Paramount Skydance still wants its Warner Bros. Discovery takeover wrapped by the end of September, even as a coalition of state attorneys general is trying to stop the entertainment tie-up in court.
Jeffrey Kessler, Paramount’s lead trial counsel, told CNBC’s David Faber on “Squawk on the Street” Tuesday that the company views the merger as “pro-competitive” and is prepared to keep fighting if the legal challenge drags on.
The lawsuit was filed Monday by state attorneys general led by California Attorney General Rob Bonta. According to CNBC, the states are seeking to block the deal on antitrust grounds, with concerns centered on the film business and pay TV markets.
The coalition also filed papers asking for a temporary restraining order, CNBC reported. Kessler said that move followed Paramount’s indication that it wanted to be in a position to close as soon as July 22, if it receives the approvals it still needs.
EU decision is the next big gate
The key date now sits in Europe. CNBC reported that the European Union is reviewing the merger and has set July 22 as a new provisional deadline. Paramount has submitted concessions to EU regulators as it tries to address concerns about the deal.
The proposed combination has already been cleared by the Antitrust Division of the U.S. Department of Justice and by other jurisdictions around the world, according to CNBC.
Kessler said Paramount would accept a court timetable that resolved the fight by early September, calling that acceptable if the parties could agree on an orderly process. He told CNBC the states rejected that option, leaving the temporary restraining order request in play.
If a temporary restraining order is granted, CNBC reported, it would pause the transaction for 14 days. Up to two such orders could be issued before the states seek a preliminary injunction, which could keep the deal frozen while litigation continues.
Kessler said Tuesday that Paramount does not expect the case to reach that stage. He also said the company is willing to take the dispute to the Supreme Court if a long blockade threatens the closing.
A costly clock is ticking
A delay past Sept. 30 could get expensive for Paramount. CNBC reported that the merger agreement includes a ticking fee requiring Paramount to pay additional sums to Warner Bros. Discovery shareholders for each quarter after that date until closing.
That fee would amount to about $650 million in cash value per quarter, according to CNBC.
Kessler argued that the deal would create a stronger rival to major streaming and entertainment players, including Netflix, Disney and Amazon’s Prime. He also pointed to pressure on pay TV bundles and the broader challenges facing the entertainment industry.
Bonta said Monday in a release that the merger would bring higher prices, poorer quality and less film and television content, hurting theaters, basic cable distributors and audiences.
Paramount CEO David Ellison has previously promised that the combined studios would release 30 films a year, CNBC reported. Kessler said Paramount has told the states it is willing to put that commitment in writing, with litigation available later if the company fails to follow through.
This story draws on original reporting from CNBC.