Paramount CEO David Ellison is confronting a significant antitrust challenge as he attempts to finalize the $110 billion acquisition of Warner Bros. Discovery (WBD) [1]. The latest obstacle comes from a coalition of state attorneys general, led by California Attorney General Rob Bonta, who are seeking to block the deal on antitrust grounds. Ellison has responded by taking his case public, including writing a New York Times op-ed, and has attempted to garner support from Hollywood exhibitors while also threatening to relocate Paramount offices from California [1].
The antitrust case is set for trial in March, and Ellison remains confident that the deal will ultimately go through, according to a person familiar with his thinking [1]. Paramount's lead trial attorney, Jeffrey Kessler, stated on CNBC in July that the company is prepared to take the matter to the Supreme Court if necessary [1]. Despite these efforts, Ellison has made little progress in negotiations with Attorney General Bonta, who has expressed a strong intention to pursue regulation where he believes previous federal regulators have been insufficient [1].
Ellison's pursuit of WBD began last September with three unsolicited bids, leading to a formal sale process that replaced WBD's initial plan to split the company in two [1]. Netflix was initially declared the winner of the bidding war, but after Netflix abandoned its pending transaction in February, Paramount entered into an agreement to acquire all of WBD, promising shareholders a premium [1]. The deal has already received approval from all global regulators, including the U.S. Department of Justice's Antitrust Division, leaving the group of 12 state attorneys general as the final barrier to completion [1].
The ongoing delay in closing the acquisition could result in significant additional costs for Paramount, especially given the current pressures facing media companies [1]. Both sides have indicated a willingness to negotiate outside of court, but according to Tom Rogers, senior advisor to Versant Media Group, there is little incentive for the state attorneys general to settle due to strong opposition from California constituents [1].
CONCLUSION
Paramount's $110 billion acquisition of Warner Bros. Discovery faces a critical antitrust challenge from a coalition of state attorneys general, with a trial scheduled for March. While the deal has cleared all other regulatory hurdles, the outcome of the state-level opposition remains uncertain, posing significant risks and potential costs for Paramount and its stakeholders.