Paramount Skydance is bracing for opposition to its $81 billion takeover of Warner Bros. Discovery – expecting that a duo of left-wing attorneys general will argue the tie-up violates antitrust laws that are allegedly being ignored by the White House, On The Money has learned.
Executives at the media giant run by David Ellison and his father, the mega billionaire Trump-friend Larry Ellison, “wake up every day thinking a lawsuit is being filed” by California AG Rob Bonta, New York’s Tish James and possibly a handful of other state AGs, according to a person with knowledge of the matter.
A quirk in US antitrust law allows states in some cases to override DOJ decisions, particularly if the state is big enough where the companies have significant business interests. California, for all of its woes with businesses exiting the state, is still nominally the home of the entertainment industry. New York, left-wing warts and all, remains the financial capital of the country.
People at Paramount Skydance expect a joint lawsuit, with California taking the lead given it’s the headquarters of Hollywood, where a coalition of actors, studio types and left-wing activists have opposed the deal on the grounds that it will lead to fewer jobs. There’s also the fact that the Ellisons are seen as friendly to Trump, whom West Coast elites despise.
I am told the Ellisons are ready to play a long game in the courts and win on the merits. The delay, however, will be costly. They believe a swift merger approval will lead to savings and eventually more jobs, more movies, and more money for the Hollywood lefties who are opposing the deal. A delay will likely lead to cutbacks in all of the above.
Reps for Bonta had no comment, while those for James had no immediate comment. A Paramount Skydance rep had no comment.
Both New York and California have launched investigations into the deal, as On The Money has reported. After Trump’s antitrust cops at the DOJ greenlit the deal on a federal level last week, Bonta appeared to signal his intentions by calling the move “shameless.” James has spoken specifically about the deal, but she uses language employed by deal critics about antitrust concerns that emerge from such large mergers.
People inside Paramount Skydance believe such concerns are non-existent, and they have a good point. The biggest overlap in the $81 billion combo is that it combines two large studios, Warner and Paramount, which both face intense competitive pressures.
Given the difficult economics of the business, the merger will likely save jobs. Before deal talk began last year, Warner Bros. Discovery was languishing despite producing a slew of hit movies. The company has been culling jobs since the 2022 merger of the ailing Warner Media with Discovery under CEO David Zaslav.
The company was grappling with huge amounts of debt, cord cutting and difficulty in making HBO Max profitable. That’s before Zas started a bidding war for the company. The $31-a-share deal the Ellisons reached with him was a significant premium to WBD’s price of around $8 before bidding began in the summer – a sign that Wall Street had previously believed the company’s future as a standalone entity was bleak.
So without a strong antitrust argument, what do Bonta and James have, exactly?
The answer: Politics and bad blood.
The Ellisons are looking to move programming and news to the middle and away from the leftism that has permeated CBS, now a subsidiary of Paramount; and CNN, which will also be theirs if the deal is approved.
James has long been a Trump antagonist, including her infamous and petty lawsuit claiming Trump and his real estate business, the Trump Organization, inflated the value of Trump Tower in Manhattan on a loan application, eliding the fact that the loan was paid back and the bank did its own evaluation.
A lefty New York state judge initially ruled in favor of the AG and imposed a $450 million penalty on Trump, but the ruling was later overturned. James is appealing, but she faces her own legal issues from Trump and his team for financial fraud. While a federal judge last year dismissed one mortgage-fraud case, Trump’s housing czar Bill Pulte made criminal insurance-fraud referrals against James over rental properties she owns.
“They’re communists, so of course they will oppose this deal,” said one person close to Paramount. “In the end they will probably lose, but if they win, do you really think Warner won’t be cutting costs given what was happening before the deal?”
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