US states could sue next week to block Paramount-Warner Bros deal, sources say

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July 8 : U.S. states concerned that Paramount's $110 billion acquisition of Warner Bros. Discovery will hurt competition could sue to block the deal as soon as next week, two sources familiar with the matter told Reuters.

The sources did not specify the type of competition that the states were concerned about. But advocacy groups and some state regulators have warned that subscription prices for streaming platforms could rise and the merged companies could lay off workers and offer a narrower range of films, news and other content.

If the deal is delayed because of a court challenge, costs could mount for Paramount, which is already expected to carry around $80 billion in debt after the transaction closes.

Paramount CEO David Ellison has agreed to pay Warner Bros. Discovery shareholders a 25-cent-per-share "ticking fee," amounting to about $650 million in cash each quarter, if the deal does not close before October. 

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In early June Reuters reported California, New York and other U.S. states were preparing a lawsuit as state officials look to step up their scrutiny of big mergers and acquisitions as federal antitrust authorities take a more business-friendly stance. 

California Attorney General Rob Bonta has taken the lead in investigating whether the deal violates U.S. laws against mergers that would unlawfully harm competition.

A spokesperson for Bonta's office declined to comment. A Paramount spokesperson did not immediately respond to a request for comment.

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