Paramount might be forced to part ways with some of its cable networks if it wants to complete its $110 billion acquisition of Warner Bros. Discovery.
According to a report by Joe Flint and Jessica Toonkel in The Wall Street Journal on Sunday night, California Attorney General Rob Bonta, who along with 11 other states is suing Paramount on antitrust grounds over its planned acquisition of Warner Bros. Discovery, is expected to meet with Paramount CEO David Ellison on Monday and ask him to “divest some cable channels and commit to keeping [Paramount’s] studio separate from Warner Bros.” as conditions to settle the lawsuit and allow the transaction to move forward.
It is unclear exactly what “some” cable channels means in this context or if any of those cable channels would include the ones Paramount is set to acquire from Warner Bros. Discovery should the merger be consummated. In a sports context, Paramount owns CBS Sports Network. Warner Bros. Discovery owns the TNT Sports networks, which include TNT, TBS, and truTV.
The lawsuit filed by the 12 state attorneys general argues the merger would create “too much concentration” in the market for cable networks, the Journal reports.
There is certainly motivation for Paramount and Ellison to find a path towards a settlement. Beginning Oct. 1, Paramount will owe Warner Bros. Discovery shareholders a “ticking fee” for each day the transaction is not finalized. That fee amounts to about $650 million per quarter and, should the antitrust case go to trial, which is scheduled for next spring, Paramount would owe over $1 billion in such fees.
It does not seem likely anything final will be hashed out at Monday’s meeting. Per Flint and Toonkel, “People close to the talks between the two sides are doubtful significant ground will be made Monday.”
The possibility of Paramount divesting in some of its cable networks could prove meaningful to sports fans, particularly if CBS Sports Network, TNT, TBS, or truTV are targeted. It’s unclear if that would be the case. After all, much of the concern from Bonta and the other attorneys general is centered on the scripted entertainment business. It could be more likely that networks like Showtime, BET, MTV, or Comedy Central are the cable channels Bonta and Co. have in mind.
If some of Paramount’s cable networks do come on the market, it would be very interesting to see which companies come forward as potential buyers. While the cable TV business is in a steady decline, these networks still generate significant cashflow from monthly per-subscriber carriage fees.
To be sure, there’s still a long ways to go before Paramount agrees to divest in any of its current (or future) cable networks. But the possibility appears to be firmly in play, pending settlement talks between Paramount and Bonta.
About Drew Lerner
Drew Lerner is a staff writer for Awful Announcing and an aspiring cable subscriber. He previously covered sports media for Sports Media Watch. Future beat writer for the Oasis reunion tour.