Three court filings Monday shed light on where Paramount Skydance and Warner Bros. Discovery’s proposed merger stands as a federal judge considers whether to approve an antitrust settlement with 12 states.
Paramount Skydance and Warner Bros. Discovery urged U.S. District Judge Araceli Martínez-Olguín to approve the proposed settlement, arguing that the agreement adequately addresses the antitrust concerns raised by the states.
The states filed their own response supporting the settlement, while plaintiffs in a separate private antitrust lawsuit emphasized that their case would continue regardless of whether the settlement is approved.
The companies’ filing responds to questions raised by Sen. Cory Booker, who has challenged whether the settlement provides sufficient protections for competition.
“This settlement is not an endorsement of this merger,” Booker’s Sept. 22 letter reads. “Paramount answered with what amounted to extortion. It threatened to pull jobs out of California if they blocked the deal, after calling its artists and workers a priority.”
Paramount and WBD argue that the court has not determined that their proposed merger violates antitrust law and, therefore, should evaluate the agreement as a negotiated settlement rather than require remedies that would completely eliminate every potential competitive effect of the transaction.
“This decree easily meets that standard,” the studios’ filing reads. “Twelve attorneys general, each accountable to their own electorate, judged this relief to be a fair compromise sufficient to resolve the claims they asserted in the complaint.”
The states make a similar argument. They said the judge should determine whether the settlement is fair, reasonable, equitable and lawful, rather than apply the broader public-interest review associated with the federal government’s Tunney Act. The states also argue that opponents of the settlement face a high burden to show that the agreement is unreasonable.
The proposed settlement includes several restrictions on the combined company’s operations. These include requirements to release at least 30 films annually during the first two years and 32 films annually during the following three years, with additional requirements involving independent films, tentpole productions and domestic production spending.
The agreement also establishes minimum theatrical windows, restrictions involving movie theater pricing and basic cable networks, and provisions involving the divestiture of Miramax.
The states argue that the agreement includes mechanisms to enforce those requirements, including an internal compliance monitor and an independent monitoring trustee. They also defend a proposed News Editorial Independence Board intended to address concerns about journalistic independence and the range of viewpoints available to the public.
As those arguments were filed Monday, Paramount was simultaneously arranging the money needed to close the WBD acquisition, even though the court has not yet approved the antitrust settlement.
In an SEC filing, Paramount introduced a $44.4 billion debt offering that includes about $32 billion in investment-grade debt, in dollars and euros, and the equivalent of $12.4 billion in high-yield bonds.
Paramount said the proceeds will be used to help fund the Warner Bros. Discovery acquisition and repay certain existing debt. The company also plans to use cash on hand and previously announced debt and equity financing.
The final structure has not yet been set, with exact amounts and rates remaining subject to market and other conditions. According to Bloomberg, Bank of America and Citigroup hosted calls Monday to market the debt and generated enough demand to cover the offering.
Paramount is using Oct. 7 as a financing assumption date, but with the court yet to approve the settlement, the actual closing date remains uncertain.
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