Paramount CEO David Ellison said on Monday he was confident the $111bn merger with Warner Bros Discovery (WBD) will close, days after delaying the transaction amid upcoming antitrust cases in the US.
Ellison told staff in a memo that Paramount lawyers are exploring potential trial dates with their counterparts at 12 US states and the Writers Guild Of America, who are suing to block the merger.
“Let me be clear: we remain highly confident that this transaction does not pose any legal issues, and we will complete it and bring these two companies together,” Ellison wrote in the memo obtained by Screendaily.
“To that end, Paramount, WBD, the state attorneys general and the WGA have agreed not to proceed with the court-ordered preliminary injunction hearing scheduled for August 3. The parties will instead move directly to a trial on the merits. We believe this is the right path because the facts and the law are on our side, and a full hearing will demonstrate why the plaintiffs’ arguments should not prevail.
Scroll to bottom for full memo.
Last Friday Paramount agreed to postpone the merger amid legal action. At time of writing a “ticking fee” becomes payable by Paramount to WBD shareholders should the merger close after September 30. The fee is understood to be equivalent to just under $7m a day. Were the entire transaction to fall apart, Paramount would owe WBD $7bn.
Eillison’s memo in full:
Team,
I know there’s been a lot of news coverage about our company in recent weeks, and I recognize that references to court proceedings, delays and deal timing can create questions and uncertainty. And so, I want to take a moment to share an update on the litigation related to our proposed transaction with Warner Bros. Discovery.
While many of you have likely been following the deal’s developments, here’s a brief recap. Over the past several months, our leadership team and legal partners have worked closely with antitrust and competition authorities around the world. As a result, regulatory bodies and governments representing 65 jurisdictions – including the European Commission, Australia, China, the U.S., Germany, France, Spain, Canada and South Korea – have either cleared the transaction or elected not to challenge it on competition and/or foreign direct investment grounds.
These clearances reflect both the facts and the law: this combination is fully consistent with the anti-trust laws, and will create a stronger, more competitive media company with the scale to invest more deeply in storytelling, expand consumer choice and compete more effectively in a rapidly changing entertainment landscape. Just as important, it will create more opportunities for creators by enabling the combined company to invest more in content, take creative risks and accelerate the technologies that will deliver greater choice and a better experience for audiences everywhere.
Absent the lawsuit filed by the California Attorney General along with 11 other attorneys general, and a separate lawsuit from the Writers Guild of America (WGA), both seeking to block the merger, we would have been able to close the transaction in the coming weeks.
Let me be clear: we remain highly confident that this transaction does not pose any legal issues, and we will complete it and bring these two companies together. To that end, Paramount, WBD, the state attorneys general and the WGA have agreed not to proceed with the court-ordered preliminary injunction hearing scheduled for August 3. The parties will instead move directly to a trial on the merits. We believe this is the right path because the facts and the law are on our side, and a full hearing will demonstrate why the plaintiffs’ arguments should not prevail.
This week, the parties will discuss potential trial dates and provide an update to the court next Friday. The timing of the trial will be determined after the court reviews those discussions and issues a schedule.
In the meantime, absent further developments, the completion of the transaction will remain paused. Our teams will continue planning under the direction of the Integration Management Office (IMO) and in consultation with our legal advisors. Given the revised timeline, the IMO may adjust the pace and sequencing of its work in the weeks ahead to reflect the revised timeline. Those involved in the integration planning effort will hear directly from Tony Driscoll, who leads the IMO for Paramount. I also encourage you to visit the Integration Hub for the latest updates, FAQs and other resources.
I know this additional uncertainty has been challenging, and I want to thank you for your continued patience, commitment and collective contributions. For now, it remains business as usual. Paramount and WBD are separate companies operating independently, and our focus remains on serving our audiences, supporting one another and executing our strategy. We’ve had a strong first year as the new Paramount, and that’s because of you. I’m incredibly proud of everything this team has accomplished.
As always, we are committed to being as direct and transparent as possible. When there is meaningful, confirmed information to share, you will hear it from us. Until then, please know that we remain confident in our position and firmly believe this transaction is pro-competitive and will deliver meaningful benefits for consumers, creators and the broader entertainment industry
Thank you again for all you do for our company, our audiences and one another. I hope you have a wonderful summer and look forward to what we will accomplish together in the months and years ahead.
Let’s go!
David
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