Paramount is conducting advanced negotiations with California authorities in the US to resolve the antitrust process currently blocking the completion of the $81 billion acquisition of Warner Bros. Discovery, which is approximately R$ 429 billion. According to sources close to the matter who spoke with The Wall Street Journal, this action was initiated in July by California and 11 other states led by Democrats.
The state governments seek to block the merger, alleging that the union between Paramount and Warner would result in excessive concentration in both the cinema and subscription television channel markets. Although negotiations are underway, there is no certainty that both parties will reach a consensus.
The quick conclusion of this transaction interests Paramount, as it would represent a major restructuring in the entertainment sector by integrating two of the oldest film studios in the United States, along with the Paramount+ and HBO Max streaming services, and various television networks.
Developments of the antitrust dispute
While trying to resolve the antitrust controversy, Paramount has also expressed its intention to relocate its operations outside of California if an agreement with the states is not reached. This move could begin as early as October 1st, with Tennessee being considered the most likely location to receive the company.
This possibility of transfer arises amid pressure for the Warner acquisition to be finalized. The pact established between the companies includes what is called a 'ticking fee,' a type of payment that Paramount must make to Warner shareholders until the operation is completed. These payments are set to begin next month, totaling about $650 million (approximately R$ 3.4 billion) quarterly, which equates to about $7 million (R$ 37 million) daily.
The dispute also involves a legal battle regarding litigation costs. Paramount has asked a federal judge to require the states and the Writers Guild of America union to provide a guarantee of nearly $1.9 billion (about R$ 10 billion) for challenging the acquisition. This amount would go to Paramount if the company wins the lawsuit. A hearing on this request is scheduled for the following week.