The Justice Department closed its antitrust review in June<\/strong> and cleared the deal<\/strong>. However, things have taken an unexpected turn.<\/p>\n A group of state attorneys general, led by California, is finalizing an antitrust lawsuit<\/strong> that could freeze the transaction<\/strong> well past the closing date<\/strong> that Paramount Skydance (PSKY) promised investors.\u00a0<\/p>\n Oregon has gone further, asking a judge to pause the deal for 60 days<\/strong> while it examines how Paramount lobbied federal officials<\/strong>.<\/p>\n Paramount<\/strong> shares felt the impact. The stock trades near $9.34<\/strong>, sitting near the bottom of its 52-week range<\/strong> of $8.62<\/strong>to<\/strong>$20.86<\/strong>.\u00a0<\/p>\n It is down about 29%<\/strong> this year and roughly 9%<\/strong> over the past five trading sessions<\/strong>.<\/p>\n Federal clearance<\/strong> does not end the fight.\u00a0<\/p>\n State attorneys general hold independent authority<\/strong> under U.S. antitrust law, and a Justice Department decision not to sue does nothing to stop them from filing their own case, Fox Business reported.<\/p>\n More Media and Entertainment Stocks:<\/strong><\/p>\n The multistate suit<\/strong> could be filed within days<\/strong>, CNN Business reported, citing people familiar with the process.\u00a0<\/p>\n California Attorney General Rob Bonta<\/strong> has voiced concerns<\/strong> for months, and his office says the investigation remains active<\/strong>.<\/p>\n Critics argue that combining two of the five largest studios would thin out competition<\/strong> in film, streaming, and news.\u00a0<\/p>\n Paramount rejects that argument, telling CNN it is confident the transaction raises no legitimate antitrust concerns<\/strong>.<\/p>\n Busà Photography / Getty Images<\/p>\n<\/figcaption><\/figure>\n Oregon Attorney General Dan Rayfield<\/strong> is conducting a narrower, more direct inquiry.\u00a0<\/p>\n According to the Oregon Department of Justice, he has asked a Multnomah County court<\/strong> to compel Paramount to hand over records<\/strong> tied to an internal lobbying effort<\/strong> the company code-named “Project Warrior<\/strong>.”\u00a0<\/p>\n Rayfield also wants to know whether Paramount helped write the DOJ statement<\/strong> that cleared the deal.\u00a0<\/p>\n According to him, this document was unusual<\/strong> because the agency normally speaks up<\/strong> when challenging a merger<\/strong> rather than clearing<\/strong> one.<\/p>\n Related: \u2018Michael\u2019 gives Lionsgate stock timely Hollywood test<\/strong><\/p>\n Under that request is a Wall Street Journal report that senior officials overruled career staff attorneys<\/strong> who had leaned toward challenging the deal<\/strong>.<\/p>\n Rayfield has said that if approval turned out to be the product of a corrupt bargain<\/strong>, it would change how Oregon reads its own evidence.<\/p>\n Paramount calls the demands irrelevant to Oregon antitrust law<\/strong> and notes it has already produced more than 822,000 documents<\/strong>, TheWrap reported.\u00a0<\/p>\n A hearing is set for Monday, July 13<\/strong>.<\/p>\n Litigation risk<\/strong> is usually something shareholders can ignore. But not this time. Here, the cost is easy to see.<\/p>\n According to Paramount’s merger agreement<\/strong>, if the deal has not closed by Sept. 30, 2026<\/strong>, Warner Bros. Discovery shareholders collect a 25-cent-per-share “ticking fee” every quarter<\/strong> until it does.<\/p>\n That works out to roughly $650 million a quarter<\/strong>.<\/p>\n A ticking fee is simply compensation<\/strong> to the target’s shareholders for waiting. It rewards them for patience and punishes the buyer for being slow.<\/p>\n A delay also pushes back the $6 billion in cost savings<\/strong> Paramount has told investors it will capture after closing, Benzinga noted.\u00a0<\/p>\n The company is already expected to carry about $80 billion in debt<\/strong> once the transaction completes.<\/p>\n The bull case has not disappeared, but it now depends on a sequence of events landing in order.<\/p>\n Miss any one of those and the Sept. 30 date slips, which means the fee starts accruing.<\/p>\n The gap between Paramount Skydance and the broader market says a lot.<\/p>\n PSKY is down about 29%<\/strong> this year. Operationally, the company is not falling apart, as first-quarter revenue<\/strong> reached $7.35 billion<\/strong>, up 2.2%<\/strong> from a year earlier.<\/p>\n Paramount’s earnings also beat consensus<\/strong> by a wide margin<\/strong>, according to the company’s SEC filing.<\/p>\n However, Wall Street is unconvinced<\/strong>. Wells Fargo cut its target<\/strong> to $7 from $8<\/strong> and kept an underweight<\/strong> rating.\u00a0<\/p>\n Guggenheim reduced its target to $12<\/strong> while maintaining a neutral rating<\/strong>, citing debt concerns<\/strong>. The consensus rating across Wall Street is a moderate sell<\/strong>.\u00a0<\/p>\n The market is not pricing an operating problem. It is pricing the odds that a judge grants a pause on the merger.<\/p>\n Merger arbitrage is a bet on timing as much as outcome, and right now, the calendar is what matters.<\/p>\n Monday’s Multnomah County hearing<\/strong> is the first real test. The July 22 EU decision<\/strong> follows, and the U.K. Competition and Markets Authority faces an Aug. 7 deadline<\/strong> on its Phase 1 review<\/strong>.\u00a0<\/p>\n Any state lawsuit filed in between could add months<\/strong>.<\/p>\n None of that guarantees the deal will die, as State challenges do not always succeed.\u00a0<\/p>\n However, a coalition of attorneys general did stall Nexstar’s takeover of Tegna earlier this year when a judge froze that transaction ahead of trial.<\/p>\n For investors, the practical question narrows to how much delay they are willing to tolerate.\u00a0<\/p>\n Even if the merger closes, the buyer inherits $80 billion in debt<\/strong> and pays $650 million a quarter<\/strong> to the other side’s shareholders until it does.<\/p>\n So the real question is not whether the deal survives, but how long you can afford to wait for it. The courts have the final say on that.<\/p>\n Related: AMC stock traders ignoring warning signs send shares surging<\/strong><\/p>\n #ParamountWBD #deal #faces #legal #hurdle #delays<\/p>\n","protected":false},"excerpt":{"rendered":" David Ellison spent eight months persuading Washington that buying Warner Bros. Discovery would strengthen competition in Hollywood, and it worked.\u00a0 The Justice Department closed its antitrust review in June and… <\/p>\n","protected":false},"author":1,"featured_media":11751,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[246],"tags":[110,5099,1751,9274,989,13191],"class_list":["post-11750","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-popular","tag-deal","tag-delays","tag-faces","tag-hurdle","tag-legal","tag-paramountwbd"],"_links":{"self":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/11750","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11750"}],"version-history":[{"count":0,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/11750\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/media\/11751"}],"wp:attachment":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11750"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11750"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11750"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Why state attorneys general can still block the Paramount-Warner Bros. deal<\/h2>\n
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![](\"https:\/\/www.thestreet.com\/.image\/NDA6MDAwMDAwMDAzMTA5NzM3\/paramounttheatre_pl_100726.jpg?profile=rss\")
Oregon’s lobbying probe and the “Project Warrior” documents<\/h2>\n
The $650 million ticking fee that turns delay into cash burn<\/h2>\n
4 things that have to go right before Paramount Skydance stock recovers<\/h2>\n
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How PSKY stock stacks up against the market and its peers<\/h2>\n
What investors should watch next in the Paramount Warner Bros. saga<\/h2>\n