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Judge pauses mega-merger
A federal judge in Oakland temporarily halted a major merger between Paramount and Warner Bros. Discovery as she considered a lawsuit from California that alleges the deal violates antitrust laws.
U.S. District Judge Araceli Martínez-Olguín granted a temporary restraining order requested by California Attorney General Rob Bonta and nearly a dozen other states’ attorneys general to pause Paramount Skydance’s $111 billion acquisition of Warner Bros. Discovery.
The order will remain in place while a judge decides whether to grant a preliminary injunction, which would delay the transaction throughout litigation.
Ars Technica reported the temporary restraining order prohibits the firms from completing the merger and from consolidating their operations, and said the order is only in effect for 14 days.
The states’ lawsuit is in U.S. District Court for the Northern District of California, where the judge wrote the states “make a strong showing that the Transaction will substantially lessen competition.”
States vs. Paramount
Rob Bonta framed the ruling as an early victory, saying, “This is a critical first win in our case to ensure this megamerger never sees the light of day.”
AP News said the states alleged the combination would “extinguish competition” in Hollywood and lead to fewer choices for consumers, particularly moviegoers and cable customers across the U.S.
Paramount said the states’ arguments were without merit, with a Paramount spokesperson telling CBS News the company’s position is that the states’ antitrust arguments are “without merit.”
The judge’s order cited the wide-release theatrical distribution market, and CBS News quoted Martínez-Olguín writing that the states’ lawsuit “presented compelling evidence” of substantial market share in that market.
NPR added that the judge focused on the merger’s consolidation of two of the remaining five major Hollywood studios and that she found the states’ case convincing “at least at first blush.”
What happens next
The temporary restraining order pauses the deal from progressing for at least 14 days, and the court set Aug. 3 as a date for a hearing on the states’ motion for a preliminary injunction.
“Judge says Paramount and Warner must halt merger for at least two weeks, granting states’ request NEW YORK (AP) — A federal judge on Monday ordered Paramount and Warner Bros”
AP News reported the preliminary injunction could be sought to effectively block the deal, and it said the temporary order could be extended for up to 28 days.
NPR said Paramount had hoped to complete the deal by Wednesday, July 22, but the pause creates financial pressure tied to a “ticking consideration” and a deadline of Sept. 30.
NBC News reported Paramount agreed to pay Warner Bros. shareholders a “ticking fee” of 25 cents a share each quarter if the transaction isn’t wrapped up by Sept. 30, and said the potential penalty is worth more than $600 million per quarter.
Beyond the immediate court schedule, the stakes include the companies’ combined reach across film and TV markets, with the states alleging the merger would reduce competition in wide-release theatrical film distribution, anticipated top-grossing movie distribution, and the market for distributing basic cable channels.
