Paramount's lead trial counsel Jeffrey Kessler told CNBC, "anybody who knows the entertainment industry knows it is in deep trouble," and emphasized the severe pressure from cord-cutting and growing competition from streaming platforms like Netflix. "The combination will produce a rival capable of competing directly with Netflix, Disney, or Amazon's Prime," Kessler said.
But not everyone is convinced. This past Monday, a coalition of state attorneys general, headed by California's Rob Bonta, initiated a legal action designed to prevent the merger on antitrust grounds. In a release, Bonta argued that the merger would "lead to higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately, audiences on every sofa and movie theater seat in the U.S."
The EU has established July 22 as an updated provisional deadline for its regulatory assessment. Kessler said Paramount "indicated" that it aimed to finalize the deal as soon as July 22, at which point the firm anticipates receiving all necessary regulatory approvals.
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Concurrently, the states submitted legal documents requesting a temporary restraining order to halt the transaction. If approved, the order would suspend the agreement for two weeks. The coalition could obtain as many as two such orders before pursuing a preliminary injunction.
Kessler said his side is open to talking. "We've told the states if they have what they think are legitimate concerns, they should come to the table and we talk about them," he said. Kessler noted that Paramount has informed state attorneys general that it will offer a written guarantee to produce 30 films each year, and if that fails, legal action could follow.
But Paramount is not planning to just wait around. Kessler said the firm is ready to take the case to the Supreme Court if confronted with a lengthy obstruction. "The company believes strongly in this," he said of the combination.
There is a financial reason to move fast, too. Under the agreement, Paramount has committed to a so‑called ticking fee. If the closing misses the September 30 deadline, Paramount must pay WBD shareholders an additional $650 million in cash every quarter until the transaction completes.
Kessler described the merger as "pro‑competitive," noting that the DOJ's Antitrust Division and global regulators have already given their approval.
The ticking fee structure is designed to pressure Paramount to close the deal quickly, as delays could cost more than $2.6 billion per year. Meanwhile, the state attorneys general argue that the combined entity would control a significant share of film production and distribution, potentially reducing independent films and raising subscription costs for consumers. The outcome of the lawsuit and EU review will determine whether Paramount can meet its September 2026 target or face mounting penalties.
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