Paramount-WBD merger likely to face multi-state lawsuit, sources say

• The merger would combine two major film studios and create the largest U.S. TV network portfolio, including CBS, MTV, BET, CNN, and TNT, plus unified streaming platforms
• The deal is valued at $31 per share for WBD and is expected to close by September, though the European Union is still reviewing with a provisional deadline of July 22
• Hollywood has raised concerns about fewer film releases and potential job losses, though Skydance's Ellison has committed to protecting jobs

Summary: Paramount-WBD Merger Faces State-Level Legal Challenge

Multiple state attorneys general, led by California AG Rob Bonta, are expected to file an antitrust lawsuit as early as Monday to block the proposed merger between Paramount and Warner Bros. Discovery (WBD), according to CNBC sources.

Deal Structure:

Paramount is acquiring WBD for $31 per share following a hostile takeover bid that topped competing offers from Netflix and others. The transaction involves Paramount's earlier merger with Skydance, led by David Ellison.

Key Assets Involved:

• Major film studios: Paramount and Warner Bros.
• Streaming platforms: Paramount+ and HBO Max (to be combined)
• TV networks: CBS, MTV, BET (Paramount); CNN, TNT (WBD)
• The combined entity would create the largest U.S. TV network portfolio

Regulatory Status:

The U.S. Department of Justice approved the merger in mid-June, determining it's "not likely to result in harm to competition or American consumers." Several global jurisdictions have also greenlit the deal. However, the European Union continues its review, with a provisional deadline of July 22. Paramount has submitted concessions to address EU concerns.

Market Implications:

The state-level lawsuit represents a significant obstacle despite federal approval, potentially delaying or derailing the transaction. Paramount had indicated the deal was on track to close by September.

Industry Concerns:

Hollywood stakeholders have raised concerns about reduced film output and potential job losses. Ellison has committed to maintaining production levels and protecting employment.

The legal challenge underscores growing scrutiny of media consolidation at both state and federal levels, introducing execution risk for investors in both companies.