Paramount plans to close WBD merger by September despite lawsuit

Paramount Skydance still aims to close its proposed acquisition Warner Bros. discovery That remains in place through the end of September, despite a recent lawsuit filed by state attorneys general challenging the deal, Paramount’s lead trial attorney, Jeffrey Kessler, told CNBC’s David Faber in an interview on Tuesday.

On Monday, a group of state attorneys general from California led by Rob Bonta filed a lawsuit aims to block the merger due to antitrust concerns. Later in the day the group filed court papers He is seeking a temporary restraining order to put the deal on hold so legal proceedings can proceed.

Either way, Kessler said he was prepared to take the matter to the Supreme Court if the company faced a prolonged blockade in completing the deal.

“The company believes strongly in it,” Kessler said of the combination of entertainment and media companies.

Kessler told Faber on Tuesday that the temporary restraining order came after Paramount “indicated” that it planned to close as early as July 22, when the company expects to receive all regulatory approvals.

The July date comes with the next big hurdle for Paramount to clear. The European Union is reviewing the agreement for ratification and recently set July 22 as a new interim deadline. Recently Paramount sent Concessions are expected to be made to the EU as it tries to address concerns about the deal.

Warner Bros. and the proposed acquisition, which would bring together Paramount’s two-story film studio as well as its expanding portfolio of pay TV networks, has already received approval from the U.S. Department of Justice’s Antitrust Division as well as other global jurisdictions.

“Or we could work out a schedule for all of this to be decided in early September, which would be completely acceptable to the company if we could establish an orderly procedure,” Kessler said. “The states rejected both alternatives, so now we have a [temporary restraining order] this has been filed.”

If accepted, the agreement will be paused for 14 days. Up to two temporary restraining orders may be issued before the coalition seeks injunctive relief, shelving the deal until it is resolved in court. Kessler said Tuesday that he did not expect the company to get to this point, arguing that it was not an antitrust issue.

A long delay could be costly for Paramount. As part of the deal, Paramount agreed to pay a nominal fee; This means that if the closing exceeds September 30, Paramount will pay additional fees to WBD shareholders each quarter until the closing. This charge would equate to roughly $650 million in cash value per quarter.

Kessler told Faber that for it to be delayed or blocked, “the merger has to be anti-competitive. This merger is pro-competitive.”

“Anyone who knows the entertainment industry knows it is in deep trouble,” he added, noting widespread difficulties as consumers flee pay TV packages and competition between streaming giants. netflix intensifies.

He added that the merger would “create a rival that could compete with Netflix or Disney.” [Amazon’s] Prime” would be a positive for the theater industry and Hollywood insiders.

Bonta said Monday that the merger “will lead to higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately audiences on every couch and movie theater seat in the United States.”

While Hollywood has expressed concerns since the deal was announced, Paramount CEO David Ellison promised that the movie studios would release a slate of 30 films a year when combined.

“We’ve told states that if they have concerns that they think are legitimate, they need to come to the table and talk about them,” Kessler said, drawing attention to the question of whether Paramount can deliver 30 movies a year.

Kessler said Paramount had informed state attorneys general that it was willing to put in writing that the company would commit to 30 films and that if that did not happen, lawsuits could be filed.