Paramount has stated that it will appeal to the Supreme Court if states impede the Warner Bros merger.

      Paramount plans to contest a 12-state antitrust lawsuit aimed at blocking its $110 billion acquisition of Warner Bros Discovery, stating its intention to take the issue to the Supreme Court if necessary. Despite the lawsuit filed by 12 state attorneys general claiming the deal would harm competition, Paramount Skydance is still targeting a completion date by the end of September. Jeffrey Kessler, the lead trial lawyer for Paramount, mentioned to CNBC on Tuesday that they are prepared for prolonged legal battles. The lawsuit, which was initiated by California Attorney General Rob Bonta, alleges that merging two major film distributors and basic cable channel owners would significantly reduce competition in theatrical distribution, cable programming, and the entertainment sector at large. Bonta noted that the merger would result in higher prices, diminished quality, and less content for consumers. The Justice Department's Antitrust Division had previously cleared the deal, declaring in June that it was unlikely to disrupt competition, making the state lawsuit a direct challenge to that federal assessment.

      Kessler informed CNBC's David Faber that Paramount was determined to finalize the deal as early as July 22, coinciding with the expected regulatory decision from the European Union. Paramount has proposed concessions to the EU to address outstanding issues. The company offered the states two options: an immediate closure of the deal or a structured judicial timeline to resolve the case by early September, both of which were declined.

      The financial stakes for Paramount are significant. Under the merger terms, if the deal hasn't concluded by September 30, Paramount will owe Warner Bros Discovery shareholders a substantial fee of approximately $650 million quarterly until the deal closes. A granted temporary restraining order would delay the transaction for up to 14 days, with the potential for two such orders before states pursue a preliminary injunction, which would halt the deal for the duration of the litigation.

      Kessler argued that the merger is beneficial for competition, as the entertainment industry faces challenges due to a decline in pay TV subscriptions and increasing streaming competition. He conveyed that the merged entity would be positioned to compete with Netflix, Disney, and Amazon’s Prime Video, with CEO David Ellison committing to the release of 30 films annually, a promise that Kessler said could be put in writing.

      The deal has already received approval from the DOJ and several international regulators, and Paramount is aligning its streaming technology to incorporate HBO Max post-acquisition. The ability of the state attorneys general to delay or entirely block the transaction will likely hinge on how swiftly the federal court in Sacramento acts regarding the restraining order request.