Paramount’s acquisition of Warner Bros. Discovery is anticipated to close Tuesday after a federal judge approved the settlement of a 12-state lawsuit seeking to block the deal.
The anticipated Tuesday close date ends a process that has stretched for more than nine months. Paramount worked around what appears to have been its final roadblock on Wednesday when U.S. District Judge Araceli Martínez-Olguín granted a joint motion to approve the settlement of a lawsuit brought by 12 state attorneys general. Martínez-Olguín said in the court order that the settlement “represents a reasonable factual and legal resolution of the dispute” and that the parties came to the deal “following highly contested, however brief, litigation, and … several rounds of in-depth negotiations.”
California Attorney General Rob Bonta announced the settlement earlier this month that set a threshold for film releases, creates an independent film fund and requires the company to negotiate cable agreements for Paramount cable networks separate from those currently held by Warner Bros. Discovery. Paramount was not required to divest any properties as part of the settlement.
The $110 billion transaction, which will merge the two media conglomerates into one company, had faced several challenges that could have potentially impeded its close. For example, the European Union conducted a Phase 1 review of the merger transaction, but Paramount eventually agreed to structural remedies and received approval. In addition, U.K. culture secretary Lisa Nandy had stated this summer that she was “minded to intervene,” but ultimately chose not to after Paramount agreed to concessions.
The U.S. Department of Justice antitrust division approved the deal in June, claiming that it was “not likely to result in harm to competition or American consumers” as it relates to SVOD, linear television and “studio development, production or distribution of films for theatrical release.” Yet the state attorneys general who sued to block the merger had succeeded in delaying its close, receiving a temporary restraining order and, shortly thereafter, preliminary injunction. Bonta, in a statement at the time the coalition received the TRO, called the merger “unlawful.” The case was scheduled for a 12-day trial in early March 2027 before the sides agreed to a settlement.
Paramount had agreed to pay a $0.25/share ticking fee calculated daily for every quarter the deal is not closed beginning this Thursday. With the merger reportedly nearing its final outcome, the company has seemingly limited the financial burden it will need to endure as the combined venture assumes a net debt load of approximately $79 billion. Paramount already paid a $2.8 billion termination fee to Netflix on behalf of WBD after submitting what was deemed a “company superior offer” earlier this year.
The merged company will own Paramount+ and HBO Max, which have plans to combine into one streaming platform. HBO and Max content chairman/CEO Casey Bloys will run the service following the departure of Paramount DTC chair Cindy Holland, according to a report by Matt Donnelly of Variety. Paramount also announced Wednesday that Ynon Kreiz would be the co-CEO of the merged company once the deal closes. Kreiz has been the chairman/CEO of Mattel for the last eight years.
The merger will also bring CBS Sports and TNT Sports together under common ownership. The two companies have worked together televising the NCAA Division I men’s basketball tournament since 2011 and will form a combined portfolio containing NFL, college football, MLB, NHL and NASCAR rights among other sports properties.
Paramount’s previous acquisition by Skydance could allow the NFL to trigger a reported change-of-control provision in its CBS deal, and negotiations between the sides were already believed to be ongoing earlier this year, before being temporarily halted so Paramount could focus on the aforementioned lawsuit. The NFL is widely believed to have sought renegotiations of all of its media rights deals, but has so far been unsuccessful. NFL commissioner Roger Goodell recently said in an interview with Alex Sherman of CNBC that the league is evaluating if it should repackage its current media rights deals.
Paramount chairman/CEO David Ellison said to investors this summer that Paramount should be viewed “as a buyer of sports rights.” The merged company would own a portfolio with several agreements nearing expiration, most notably the deals with MLB and the NHL in 2028.
WBD CEO David Zaslav, along with CFO Gunnar Wiedenfels and CRO/CSO Bruce Campbell are expected to exit the company, per a report by Todd Spangler of Variety. Paramount expects to carry out $6 billion in so-called ‘synergies,’ which are in addition to more than $3 billion in ‘synergies’ from its merger with Skydance. The new name of the combined company could be announced as soon as Thursday, according to a report by Brian Stelter of CNN.
