Paramount Skydance Corp. is actively exploring various options, including structural changes to its $110 billion acquisition of Warner Bros. Discovery Inc., in an effort to resolve lawsuits challenging the deal. The company has acknowledged its readiness to engage in good faith discussions to address the concerns raised by attorneys general. Paramount aims to finalize the transaction, which has already received regulatory approval from 68 global jurisdictions, including the US Justice Department and the European Union.
Investment bankers and potential buyers have shown interest in various Warner Bros. assets as Paramount's legal disputes continue. Among the assets being eyed are New Line Cinema, a subsidiary responsible for films like "The Lord of the Rings" and "It," as well as several Warner Bros. cable networks. Paramount had previously considered selling channels such as HGTV and the Food Network but later decided against it. The company is also weighing the possibility of negotiating separate distribution agreements for different parts of its TV empire as a way to settle the litigation.
The primary opposition to the merger stems from lawsuits filed by 12 Democratic-led state attorneys general and the Writers Guild trade union. California Attorney General Rob Bonta, a key figure in the states' case, is advocating for structural changes to the deal, rather than behavioral agreements, to address concerns in theatrical distribution, blockbuster distribution, and cable-channel licensing. While Paramount has indicated it is unwilling to part with CNN, analysts like Rich Greenfield suggest selling former Turner Broadcasting channels (TBS, TNT, and CNN) due to their value, particularly from sports content. Craig Huber also noted that selling CNN could alleviate political concerns about a single entity owning both CBS and CNN.
Paramount's shares were up 3% to $10.65, though they have declined approximately 20% year-to-date. The company previously attempted to sell its BET channel and sought strategic partners for MTV, with bidders also considering offers for Comedy Central. These cable channels, despite losing viewers to streaming, generate significant cash flow that Paramount views as crucial for financing the Warner Bros. acquisition. The attorneys general argue that the combined entity's extensive channel ownership could lead to increased fees for cable distributors and, ultimately, consumers. Bonta stated he would be open to divesting a "significant" portion of the combined company's 50 basic cable channels as a structural remedy.
