Paramount-WBD Now: Real Effect Of A 12-State Lawsuit?

• by Wayne Friedman , Staff Writer, Today

Paramount Skydance's near-completed merger with Warner Bros. Discovery is not so complete. Or near.

Twelve U.S. states just filed a lawsuit to stop the deal, with the primary reason being the combination will curb entertainment content/distribution, putting the TV/movie marketplace into fewer hands, which will hurt entertainment employment for the future.

This comes at what may be a difficult time for Paramount Skydance, with the company looking to complete its $111 billion deal.

This will significantly delay many things on the company’s big list to address.

What really happens with those rapidly declining (through still profitable) cable TV networks the company would own -- around 50 basic channels in total?

Does the company really look to sell them off, combine them, or re-imagine them as exclusive digital and web-based platforms to make them more efficient?

A more high-profile issue is the TV/streaming news channel operations -- the long-time CBS News group (including continued upheaval at shows like “60 Minutes”) and its likely combination with CNN?

What about a movie-studio combination of Paramount Pictures and Warner Bros? Skydance has promised that total output of theatrical movies will stay nearly at the same levels: 15 per year each for Paramount and Warner Bros.

But many are skeptical that all will remain the same -- or what company employment will be like at those studios. For one, Paramount has talked up “content spending reductions” to investors.

And there is this to consider: If the deal gets delayed after October every quarterly period that goes by means Paramount needs to pay WBD and its shareholders a “ticking” fee -- 25 cents a share per quarter. This could amount to $700 million every three months.

Now, adding just under $1 billion to a $111 billion merger deal price by itself won’t, by itself, kill off the deal -- one that is mostly funded by Larry Ellison, father of David Ellison, CEO of Paramount Skydance. Ellison has a net worth of around $200 billion currently.

Long term debt for Paramount Skydance? A massive $79 billion as a result of a $111 billion merger deal price tag.

What is the real picture going forward?

Prediction market platform Kalshi gives roughly 79% odds to the prospective deal being completed. But another 16% say no deal will be completed by anyone taking over WBD until a year from now, in July 2027.

How about the possibility that Netflix returns to make another new WBD bid? Just a 3% chance.

More storylines to consider.