Source : INDIA TODAY NEWS
Several US states could file a lawsuit as soon as next week to block Paramount’s proposed $110 billion acquisition of Warner Bros. Discovery over competition concerns, news agency Reuters reported, citing two sources familiar with the matter.
California Attorney General Rob Bonta has taken the lead in investigating whether the deal violates US laws that prohibit mergers likely to unlawfully harm competition. A spokesperson for Bonta’s office declined to comment, while a Paramount spokesperson did not immediately respond to a request for comment.
advertisement
The proposed merger would combine two of Hollywood’s four major film studios and has drawn criticism from actors, writers and others in the entertainment industry, who fear the deal could lead to job losses. Theatre owners have also opposed the combination of Warner Bros., the studio behind the Harry Potter and Superman films, with Paramount Pictures, arguing that the merger could result in fewer movies, reduce consumer choice and weaken competition.
Paramount has defended the transaction, saying the combined company would be better positioned to compete for audiences, talent and investment. Paramount CEO David Ellison has also sought to address concerns raised by theatre owners, stating that the merged film studios would release 30 movies annually.
A legal challenge could increase financial pressure on Paramount, which is already expected to carry around $80 billion in debt after the transaction closes. Under the terms of the agreement, Ellison has agreed to pay Warner Bros. Discovery shareholders a 25-cent-per-share “ticking fee”, equivalent to about $650 million in cash every quarter, if the deal does not close before October.
Reuters had reported in early June that California, New York and other US states were preparing a lawsuit as state officials stepped up scrutiny of major mergers and acquisitions, even as federal antitrust authorities eased their oversight.
Analysts have said Paramount’s political connections and other factors gave the company an easier path to regulatory clearance from US federal antitrust watchdogs. Paramount CEO David Ellison’s father, billionaire Oracle co-founder Larry Ellison, has cultivated ties with President Donald Trump.
While lawsuits seeking to block mergers do not always succeed, they can delay transactions for months if a judge orders the merger to pause while the case proceeds. Since multiple states are coordinating their efforts, the timeline for filing the lawsuit could still change.
A court could also direct Paramount and Warner Bros. Discovery to keep their assets separate during the legal proceedings, delaying the $6 billion in cost cuts that Paramount has said it plans to achieve after the merger closes.
– Ends
With agency inputs.
SOURCE :- TIMES OF INDIA
