$80bn Paramount-WBD merger faces state lawsuits, EU delay
A proposed merger between Paramount and Warner Bros Discovery is facing multi-state lawsuits and European scrutiny, threatening to derail a deal that would create an $80 billion debt-laden media giant.
The proposed merger between Paramount and Warner Bros Discovery is advancing despite significant legal and regulatory headwinds. California and 11 other states have filed a lawsuit to block the combination, even after the deal cleared federal review. The European Union is also scrutinizing the transaction, a development that could push the closing date past its September target.
If completed, the combined entity would carry roughly $80 billion in debt. Both companies are heavily burdened by depreciating cable television networks that lose value as consumers abandon traditional pay-TV packages. WBD itself put its assets on the market just three years after its previous merger with Discovery, having previously failed to secure a deal with Netflix.
Labor groups and state regulators argue the consolidation will drastically reduce competition. The Writers Guild of America is suing to stop the deal, stating: “If Paramount succeeds in buying Warner Bros, the merged firm will be the largest buyer of original film and television programming in the United States, eliminating vigorous competition from a major film and television studio that has operated for more than a century.”
A report last month by the LA County Department of Economic Opportunity estimated the merger could result in approximately 6,000 job losses, with 2,495 concentrated in Los Angeles County alone. Paramount’s chief legal officer, Makan Delrahim, has pushed back against these projections. He told the LA Times in June: “Once you look at it, it’s incredibly pro-competitive. It increases output, it increases jobs, and it lowers the cost to the consumers.”
As Paramount navigates these lawsuits, it is also weighing its physical footprint. Tennessee’s deputy governor, Stuart McWhorter, sent a letter to Paramount CEO David Ellison urging the company to relocate its operations, citing a "favorable business climate." An adviser to Ellison told The Hollywood Reporter that “everything is on the table,” signaling a potential geographic shift as the company looks to manage costs ahead of a highly leveraged combination.
