Needham sees Paramount Skydance-Warner Bros deal closing despite suit

Investing.com - Needham maintained its view that the Paramount Skydance acquisition of Warner Bros Discovery will close despite a lawsuit filed Monday by 12 state attorneys general seeking to block the transaction.

The lawsuit, filed in the U.S. District Court for the Northern District of California and led by California Attorney General Rob Bonta, includes attorneys general from New York, New Jersey, Massachusetts, Colorado and several other Democratic-led states. The suit contends that combining Paramount Skydance and Warner Bros Discovery would substantially lessen competition, resulting in higher prices for consumers, fewer entertainment choices, lower wages in Hollywood and lower quality content.

Paramount Skydance has committed to increasing the number of films released to about 30 annually and to not cutting staff or the content budget. The company said it is still targeting a September 30 closing date, though the lawsuits add risk of delay.

If the deal closes after September 30, 2026, Paramount Skydance will owe $0.25 per Warner Bros Discovery share per quarter, or about $650 million quarterly, in additional consideration to shareholders. Warner Bros Discovery CEO David Zazloff filed to sell 2.2 million shares of the company's stock.

Needham analyst Laura Martin said the firm believes Paramount Skydance's primary competitors are YouTube, Amazon Prime Video and TikTok rather than traditional studios such as Disney and Sony.

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