Judge Temporarily Pauses Paramount-Warner Bros. Deal
The delay is intended to give the court time to consider a lawsuit that argues the $111 billion merger violates antitrust laws.
The delay is intended to give the court time to consider a lawsuit that argues the $111 billion merger violates antitrust laws.
A federal judge on Monday temporarily stopped Paramount from completing its $111 billion purchase of Warner Bros. Discovery while she considers a lawsuit that argues the deal violates antitrust laws, a disruption to one of the biggest media deals in history.
Judge Araceli Martínez-Olguín of the U.S. District Court for the Northern District of California issued a temporary restraining order that was requested by 12 states that have sued to block the deal.
The pause will last only 14 days. But in her order, Judge Martínez-Olguín raised the prospect of a much longer delay. She said she would weigh, at a hearing in early August, whether to grant an injunction, which could halt the deal from closing for months.
The lawsuit is one of the final hurdles in Paramount’s persistent push to buy Warner Bros. Discovery and create a Hollywood giant. The merger would unite under one roof two major movie studios, the streaming services HBO Max and Paramount+, and networks including CBS and CNN. David Ellison, the tech scion who runs Paramount, has mounted a monthslong campaign to acquire Warner Bros., ultimately outbidding Netflix after proposing a handful of escalating offers.
A prolonged pause in the merger could be costly for Paramount. The company agreed to pay Warner Bros. Discovery shareholders a fee of $650 million for every quarter that the deal does not close, beginning in October. That puts an expensive shot clock on the deal, giving Paramount an extra incentive to resolve the states’ lawsuit quickly.
Paramount argues that the deal will help the company compete with streaming services like Netflix and Amazon. But attorneys general in several states, led by Rob Bonta of California, have argued that the deal would give Paramount outsized dominance over the production of films in wide release; tentpole movies, which are the costly would-be blockbusters that sustain studio revenues; and basic cable channels. The states previously said the deal could close as early as July 22.
