Paramount's chief litigation counsel, Jeffrey Kessler, appeared on a major financial news program on Tuesday to defend the company's planned acquisition of Warner Bros. Discovery, arguing the merger would benefit market competition.
Earlier this week, a coalition of state attorneys general, led by California's Rob Bonta, filed an antitrust lawsuit seeking to block the deal, with core concerns centered on the film and pay-TV industries.
Kessler stated the company still aims to complete the transaction in late September and is currently awaiting regulatory approval from the European Union.
Paramount Global's chief litigation counsel, Jeffrey Kessler, indicated in an interview on Tuesday that despite the recent legal challenge from multiple states, the company plans to finalize its acquisition of Warner Bros. Discovery by the end of September.
On Monday, California Attorney General Rob Bonta led a group of state attorneys general in filing a lawsuit to block the merger on antitrust grounds. Later that day, the prosecuting team submitted court documents requesting a temporary restraining order to halt the closing of the deal pending further judicial proceedings.
Kessler noted that if the transaction's closing is obstructed for an extended period, the company is prepared to appeal the case to the U.S. Supreme Court.
Regarding the merger of these two major entertainment and media giants, Kessler expressed, "The company has full confidence in this transaction."
Kessler informed the interviewer on Tuesday that the prosecutors' request for a temporary restraining order came after Paramount had indicated it could potentially receive all regulatory approvals and complete the deal as early as July 22nd.
July 22nd is a critical regulatory milestone for Paramount: the European Union is reviewing the merger and recently set July 22nd as a new provisional deadline for its decision. To address EU regulatory concerns, Paramount has recently submitted a package of remedy commitments.
The merger would combine the historic Warner Bros. and Paramount film studios along with extensive pay-TV network assets. It has already received approval from the U.S. Department of Justice's Antitrust Division and regulators in multiple other jurisdictions.
Kessler stated, "We could have negotiated a schedule to complete all rulings by early September. The company would have been perfectly fine with that if the process was orderly. But the state attorneys general rejected two compromise proposals and have now directly filed for a temporary restraining order."
If the court grants a temporary restraining order, the transaction would be paused for 14 days. The prosecuting team could request up to two such orders before seeking a preliminary injunction, during which time the deal would remain on hold awaiting a substantive court hearing. Kessler said on Tuesday the company does not expect the situation to reach that point, emphasizing that the merger does not pose any monopoly or competition issues.
A prolonged delay would impose significant financial costs on Paramount. According to the merger agreement, a ticking fee provision stipulates that if closing is delayed beyond September 30th, Paramount must pay an additional fee to Warner Bros. Discovery shareholders for each quarter of delay, with the cash consideration per quarter estimated at around $650 million.
Kessler stressed to the interviewer, "The prerequisite for stopping or preventing this deal must be that the merger harms market competition, but this transaction will in fact promote healthy competition within the industry."
He added, "Anyone familiar with the entertainment industry knows it is deeply troubled. Consumers are canceling pay-TV subscriptions, and competition among streaming giants like Netflix remains fierce."
The combined entity would create an industry giant capable of competing directly with Netflix, Disney, and Amazon Prime, which would be beneficial for the theatrical exhibition sector and Hollywood professionals.
In a statement released Monday, Bonta argued the merger would "raise prices for film and TV content, reduce the quality of content, decrease output, and harm movie theaters and basic cable operators, ultimately hurting every American who watches movies at home or in theaters."
Since the deal was announced, concerns have been widespread within Hollywood. Paramount CEO David Ellison previously pledged that following the merger, the combined studios would release 30 theatrical films annually.
Kessler said, "We have communicated to the state attorneys general that if they have legitimate concerns, we are open to sitting down and discussing them, including the commitment to produce 30 films per year."
Paramount has proposed to the state attorneys general that it is willing to make a written commitment to produce 30 films annually; if it fails to deliver, the prosecutors could sue over that specific breach.
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