Paramount-Warner Bros Merger Faces Judicial Scrutiny as $7.5 Billion Debt Raise Begins

U.S. District Judge Araceli Martínez-Olguín on Thursday delayed approval of the consent decree that would settle the antitrust lawsuit against Paramount’s $111 billion acquisition of Warner Bros. Discovery, pressing the parties on whether the agreement adequately addresses competition concerns.

During a virtual hearing, Martínez-Olguín questioned whether the settlement “addresses the Clayton Act concerns” raised in the July 13 lawsuit filed by California and 11 other Democratic-led states, and whether the deal was “not the result of collusion” and done at “arm’s length.” She ordered attorneys to respond by September 29 to objections filed Wednesday by Senator Cory Booker, who asked the judge to subject the decree to an “independent public-interest review.”

Paramount outside counsel Josh Holiann disputed the use of the term “blackmail” in reference to company threats to relocate jobs and production and promised the penalties in the settlement would “keep our feet to the fire.” California Senior Assistant Attorney General Paula Blizzard argued the deal was “presumptively valid,” the product of “tens of hours” of negotiation, and “the best solution” short of blocking the merger entirely. She acknowledged the “large amount of controversy” the settlement has generated since it was unveiled Monday but insisted the focus remained antitrust law.

A coalition of advocacy groups including Free Press, the Committee for the First Amendment, and the Future Film Coalition filed an emergency motion Thursday to oppose the settlement. Martínez-Olguín granted the motion, allowing them to submit briefs. The coalition called the consent decree “weak, unenforceable, and leaves workers, journalists, and consumers in the dust.” The Freedom of the Press Foundation warned that proposed News Editorial Independence Boards for CBS and CNN are “worthless” and a potential “First Amendment nightmare.” The League of United Latin American Citizens and a group of religious leaders separately asked the judge to defer entry of the decree.

Paramount has begun syndicating a $7.5 billion senior secured term loan to help fund the acquisition, the company said Thursday. It intends to raise approximately $44.4 billion of additional secured debt, plus previously announced equity financing, to pay the purchase price and refinance existing debt. Bank of America, Citigroup, and Apollo Global Management are underwriting the debt package. Morgan Stanley analysts estimated the combined company would have net debt of $77.2 billion at the end of 2026.

On the equity side, Oracle founder Larry Ellison has personally guaranteed more than $40 billion in financing. Sovereign wealth funds from Saudi Arabia, Qatar, and the United Arab Emirates have committed $24 billion and will own 38.5% of the combined Paramount-Warner Bros., according to the company. Paramount is also considering bringing Elon Musk on as an equity investor, according to an unconfirmed report by Semafor. A Paramount spokesperson declined to comment, and Musk did not respond to a request for comment. The report sparked immediate concern among CNN staff, with one source saying, “It’s really scary given what he did at X and DOGE.”

At the Financial Times Business of Entertainment Summit, merger specialists offered industry perspective. David Hernand of Simpson Thacher, whose firm is not involved in the deal, said the transaction “is evidence that, really, tech has won,” as traditional media companies scramble to compete with Apple, YouTube, and Netflix. Aaron Sobel of Apollo Global Management, which provided one-third of the financing, argued the merger “will give a traditional player a fighting chance against Big Tech,” adding that without it “Netflix was gonna take over the world.” Alex Michael of LionTree, which advised Paramount, called it “a big deal, literally and figuratively.”

Separately, Page Six reported that California Attorney General Rob Bonta was secretly advised by “Oppenheimer” producer Chuck Roven and other Hollywood insiders to better understand the industry’s business model. The terms of the consent decree require Paramount to release at least 30 films annually in theaters (rising to 32 after two years), with at least 20 wide releases and four independent films. If it misses targets, Paramount must sell Miramax and pay $30 million per missing film. Critics note the definition of “tentpole” film—a budget of at least $50 million—is low by industry standards.

The deal faces a $7 million per day ticking fee starting October 1 if not closed. A ruling from Martínez-Olguín is pending.