Judge pauses Paramount-Warner Bros. Discovery deal for 14 days
A federal judge granted state attorneys general a temporary order delaying Paramount Skydance’s proposed $110 billion acquisition of Warner Bros. Discovery.
By Hana Yoshida · Markets Reporter
3 min read
A federal judge has temporarily halted Paramount Skydance’s planned $110 billion purchase of Warner Bros. Discovery, delaying one of the largest proposed media combinations in years. The 14-day order gives state attorneys general more time to press an antitrust challenge that could slow or block the deal.
California District Judge Araceli Martínez-Olguín approved the temporary restraining order Monday after hearing arguments Friday in Oakland, CNBC reported. The order pauses progress toward completing the merger for two weeks.
The legal challenge was filed last week by a group of state attorneys general led by California Attorney General Rob Bonta. The states argue that combining Paramount and Warner Bros. Discovery would reduce competition in film, television and cable programming.
The proposed transaction would bring together Paramount and Warner Bros.’ film studios, the CBS broadcast network, cable channels including CNN, TNT, MTV and BET, and the streaming services Paramount+ and HBO Max. According to the states’ lawsuit, the combined company would control close to one-third of films and nearly one-third of basic cable television programming.
Bonta described the merger as unlawful and said it would lead to “higher prices, lower quality, and less content for film and television,” affecting movie theaters, cable distributors and U.S. audiences. His office is also leading a separate challenge to Nexstar Media Group’s proposed $6.2 billion purchase of Tegna, a deal that has been delayed after a court granted a preliminary injunction.
Paramount has rejected the states’ case and has described the Warner Bros. Discovery deal as “pro-competitive.” In a court filing Thursday, the company called the request for a temporary restraining order “one of the weakest merger challenges in modern antitrust history.”
Paramount told the court the transaction would increase high-quality programming, encourage investment in film production jobs, support basic cable television as cord-cutting pressures the business and expand theatrical releases. The company has said it remains on track to close the deal by the end of September.
Paramount lead trial counsel Jeffrey Kessler told CNBC that the states sought the restraining order after Paramount said it could close the transaction as soon as July 22, when it expected to have all needed regulatory clearances.
The merger has already received clearance from the Antitrust Division of the U.S. Department of Justice, which approved it in June, according to CNBC. Paramount has also secured approval in several global jurisdictions, while European Union and U.K. reviews have carried a provisional deadline of July 22.
The states can seek another temporary restraining order after the current 14-day pause, CNBC reported, or ask for a preliminary injunction that would delay the transaction for longer.
A prolonged delay could raise the cost for Paramount. If the deal does not close after Sept. 30, Paramount could owe Warner Bros. Discovery shareholders an additional 25 cents per share each quarter until completion, a payment CNBC said would equal about $650 million in cash value per quarter.
Paramount has also agreed to pay a $7 billion breakup fee if the acquisition fails because of regulatory issues, according to company disclosures cited by CNBC.
This story draws on original reporting from CNBC.