Paramount Lawyer Expects The Company To Close WBD Merger On Time Despite Lawsuits; Supreme Court Appeal In Play

Despite Monday’s antitrust lawsuit by the attorneys general of California, New York and 10 other states, Paramount lawyer Jeffrey Kessler says the Warner Bros. Discovery merger can still close on time.

“The plan is still to close this quarter before the end of September,” the company’s lead trial counsel told CNBC host David Faber. The segment aired before the filing of the Writers Guild of America’s additional lawsuit. “That is the goal.”

Such a result, which would fit with the company’s longstanding projection of a close before September 30, would stem from either “a happy agreement” between the parties or the states’ failure to sway a judge, Kessler said.

If the deal somehow were to get thwarted in the lower courts, Kessler said he would “absolutely” lead an appeal. “The company believes strongly in this, and they would take this up to the Supreme Court if they had to.” Paul Clement, another member of Paramount’s legal team in the antitrust case, “is one of the finest Supreme Court lawyers in the country,” Kessler noted.

In an expression of confidence as it looked to clinch its WBD bid after more than a dozen attempts, Paramount pledged to pay a “ticking fee” of $650 million each quarter as long as the deal remains pending. The promise derived from a conviction that the regulatory path would be smooth, which it largely has been. After just a few months of review, the $110 billion transaction was approved by the DOJ and dozens of other global agencies, though regulators in the UK and the European Union have not given their OK.

Paramount communicated two options to the AGs, Kessler said. One would be “to be able to close starting on July 22, when we expect to have all clearances. Or, we could work out a schedule to get this all decided by early Sept. That would be perfectly acceptable to the company, if that would create an orderly procedure. The states rejected both alternatives,” deciding instead to file for a temporary restraining order.

If the TRO is granted, it would freeze the merger process for 14 days before another TRO can be secured for an additional 14 days, Kessler said. Beyond that 28-day period, any effort to block the merger would need to be accomplished by a judge granting a preliminary injunction, a more comprehensive ban on proceeding with the deal.

“We do not expect them to be able to get a preliminary injunction,” Kessler said. “This is an antitrust case. To stop a merger, the merger has to be anti-competitive. This merger is pro-competitive. Anybody who knows the entertainment industry knows it is in deep trouble. Linear television is in deep trouble because of streaming and because of cord-cutting. Theatrical is in deep trouble because of the advent of streaming and what it has done. This merger is designed to make a stronger linear television company and to make a stronger theatrical producer and to create a true competitor in streaming that can go toe to toe with a Netflix or a Disney or a Prime [Video].

“That’s something that consumers should want, labor should want, theaters should want. That’s why I don’t think the courts are going to let them stop it.”

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