These US states plan to block Paramount's Warner Bros acquisition
What's the story
California, New York, and other US states are preparing a lawsuit to block Paramount Skydance's $110 billion acquisition of Warner Bros, as per Reuters. The lawsuit is expected to be filed in the coming weeks. This legal action represents a major step in state-led antitrust enforcement efforts. It could delay the merger, which has faced opposition from Hollywood creatives and theater owners over job losses and reduced competition concerns.
Criticism
California Attorney General slams Trump
California Attorney General Rob Bonta has slammed President Donald Trump for what he calls an "abdication" of federal antitrust agencies. Bonta, a Democrat, is leading the charge among states worried about the deal. He promised an investigation soon after Paramount announced its acquisition of Warner Bros, beating a bid from streaming giant Netflix.
Market impact
Warner Bros and Paramount's shares fell after lawsuit news
After the news of the lawsuit broke, Warner Bros shares fell by 3.6% on Friday. Meanwhile, Paramount shares fell by 6.7%. Not all lawsuits to block mergers are successful, but they can delay deals for months if a judge orders a pause during legal proceedings.
Financial implications
Paramount will pay shareholders a fee starting in October
Paramount has agreed to pay shareholders a fee starting in October if the deal remains unclosed. These fees amount to approximately $6.9 million per day, the company recently disclosed. Analysts believe that Paramount's political connections could help it clear the regulatory hurdles with federal antitrust watchdogs in the US.
DOJ decision
US Department of Justice expected to decide soon
The United States Department of Justice (DOJ) is expected to make a decision on the merger soon. The DOJ had issued subpoenas in late March, seeking details about how the merger would impact studio output, content rights, streaming competition, and movie theaters. A spokesperson for Paramount said opposing the deal "means giving entrenched incumbents like Netflix an advantage they do not deserve."