Don Chmielewski and Jodi Godoy
July 8 (Reuters) – US states are concerned that Paramount’s acquisition of Warner Bros. for $110 billion would harm competition. The company could sue to block the deal as early as next week, two sources familiar with the matter told Reuters.
The sources did not specify what type of competition the states are concerned about. But advocacy groups and some government regulators warn that subscription prices for streaming platforms could rise and the combined companies could lay off workers and offer a narrower range of movies, news and other content.
If the deal is delayed by the lawsuit, costs could rise for Paramount, which is expected to have about $80 billion in debt after the deal closes.
Paramount CEO David Ellison agreed to pay Warner Bros. shareholders. Discovery has a “tick fee” of 25 cents per share, which works out to about $650 million in cash each quarter if the deal doesn’t close by October.
In early June, Reuters reported that California, New York and other U.S. states were preparing the lawsuit as state officials “seek greater oversight of big mergers and acquisitions as federal antitrust enforcers take a more business-friendly stance.”
California Attorney General Rob Bonta has taken the lead in investigating whether the deal violates U.S. laws prohibiting mergers that could unlawfully harm competition.
A spokesman for Bonta’s office declined to comment. A Paramount representative did not immediately respond to a request for comment.
(Reporting by Jody Godoy in New York and Dawn Chmielewski in Los Angeles; Editing by David Gregorio)