America’s big media company Paramount Skydance decided on Friday that it is currently putting on hold the big deal worth about $ 110 billion with Warner Bros. Discovery. This decision has been taken because many states of America have challenged this deal in the court. Now the process of this acquisition will proceed only after the court’s decision.
According to the new agreement, this deal may remain on hold till June next year or before the court’s decision. This has reduced the time limit of the case by a few weeks, but Paramount may also have to pay a heavy financial cost.
Payment of 7 million dollars every day
If the deal is not completed by September 30, Paramount will have to pay a fee of $7 million ($7 million) per day to Warner Bros. shareholders. If the case drags on till June next year, the amount owed to the company may increase to $1.7 billion ($1.7 billion). This means that just because of the delay the company may have to bear additional expenses of billions of dollars. A Paramount spokesperson said that the company has full confidence in its stand and will present its stand strongly in court. He says that during the trial the company will prove that this deal is right as per the law.
Why did the states oppose the deal?
In fact, 12 states of America including California had filed a lawsuit against this deal on July 13. States say that if Paramount and Warner Bros. merge, a huge media company will be created. This may reduce competition in the film and TV industry and the new company can use its strength to increase the prices of entertainment services and content. New York Attorney General Letitia James said that blocking the deal while the case is pending in court is a major victory for protecting the law and maintaining fair competition in the film-TV industry.
Relief for Netflix and Disney
According to a report, in America, on an average the court takes about eight months to give its decision in cases related to such big mergers. Therefore, the decision in this matter may also take a long time. This lawsuit has been filed in the Federal Court of Oakland. If the court does not approve this deal, then Paramount CEO David Ellison’s plan to give the company a strong competition to big companies like Netflix and Disney may face a major setback.
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