Paramount agrees to delay WBD acquisition to as late as June 2027
Jakub Porzycki | Nurfoto | Getty Images
Paramount Skydance agreed to postpone its proposed acquisition Warner Bros. discovery Since the connection is facing a legal challenge, this is possible until June 2027 (a delay of several months that will ultimately increase the deal price).
Last week, a group of state attorneys general, led by California’s Rob Bonta, filed a lawsuit to block the deal over antitrust concerns. On Monday, a judge hearing the case issued a temporary restraining order, causing a short-term delay.
Paramount has repeatedly stated that it plans to complete the transaction by the end of September. The deal announced Friday says Paramount won’t complete its acquisition until the court rules on the states’ claims or June 1, 2027, whichever comes first.
Paramount called the deal a “significant win” in a statement Friday.
“The outcome is exactly what we have been looking for all along: a direct path to an evidence-based judgment. This is the fastest and clearest way to prove that this transaction is good for competition, good for consumers and good for creators, a conclusion that dozens of competition authorities around the world have already reached,” the company said. he said. “Plaintiffs’ definition of the market bears no relation to the realities of today’s market and does not stand up to scrutiny. We look forward to proving our case at trial.”
Shares of Paramount Skydance fell 3% in afternoon trading Friday.
Under the terms of the deal, Paramount will be affiliated with Warner Bros. as of September 30. Discovery shareholders will be owed a “signal fee” the longer the deal is delayed.
An additional charge of 25 cents per share each quarter through closing could reach a cash value of approximately $650 million per quarter. A delay until June 2027 could add about $1.7 billion to the deal price.
If the deal falls apart completely, Paramount will owe WBD a $7 billion breakup fee.
Paramount and WBD agreed to merge in February after the David Ellison-led company passed on its offer netflix. The $110 billion deal would bring together two major Hollywood studios, two popular streaming services and a number of TV networks.
In June, the U.S. Department of Justice’s antitrust division approved the proposed merger. Earlier this week, European antitrust regulators also approved the deal.
However, US government officials have expressed concerns that the merger would reduce competition and lead to job losses in the film industry.
“Our argument against this illegal merger is clear: When too few companies have too much power in markets that are central to American life, it makes things more expensive and makes things worse,” Bonta said. he said. expression Friday. “Today’s agreement is great news for audiences, movie theaters, and the many people who write, build, and create the art, news, and entertainment that so many of us enjoy. We look forward to continuing to pursue our case in court and celebrating another tremendous victory as we strive to ensure this illegal merger never comes to light.”
