Paramount-Warner Bros. Merger Paused As States’ Challenge Proceeds

Logo text A federal judge has granted a bid from a coalition of 12 states to temporarily stop Paramount from closing its $110 billion takeover of Warner Bros. Discovery. U.S. District Judge Araceli Martínez-Olguín on Monday issued a temporary restraining order after the states sued last week. The emergency motion sought to prevent the studio from moving ahead with the merger for 14 days. “The Court ultimately finds the public interest favors their requested TRO to stay the merger in the interim,” Martínez-Olguín wrote in the order. The states’ lawsuit alleged that the acquisition will substantially throttle competition in wide-release and top-grossing theatrical distribution and cable licensing in violation of antitrust laws. Monday’s decision swung on Paramount’s anticipated 27 percent market share in wide-release theatrical distribution. On that front, the court found that it can “presume the proposed merger is likely to violate antitrust laws” because it may “substantially lessen competition.” “The Transaction would also be difficult, if not impossible, to unwind if permitted to proceed given the anticipated consolidation of operations, sharing of business-sensitive information, and potential termination or reassignment of employees,” Martínez-Olguín wrote. Another consideration: Paramount conceded that it wouldn’t suffer any harm if the deal was frozen for a short period. That harm will begin to surface on Sept. 30, after which Warners shareholders would be owed roughly $650 million per quarter or $6.9 million per day if the transaction isn’t closed. For Paramount, the deadline is a key issue. It offered not to consummate the acquisition for up to a month if the court agreed to schedule preliminary injunction proceedings at the end of August in order for a decision to be rendered before the ticking fee is triggered. The states have asked the court to start those proceedings next year. A hearing on whether the court should issue a preliminary injunction, which would stop Paramount from closing until the case is decided, is scheduled for Aug. 3. THR Newsletters Sign up for THR news straight to your inbox every day Subscribe Sign Up