Court pauses Paramount-Warner Bros. Discovery deal for antitrust review
A federal judge issued a 14-day order delaying the $110 billion merger after states warned of competitive harm.
By James Whitfield · Staff Writer
2 min read
A federal judge has temporarily slowed Paramount’s planned $110 billion acquisition of Warner Bros. Discovery, giving state officials more time to press their antitrust challenge. The pause matters because a longer delay could trigger daily payments from Paramount to Warner Bros. investors if the deal remains open past a late-September deadline, according to The Verge.
U.S. District Judge Araceli Martínez-Olguín partly granted a request from a group of state attorneys general seeking to stop the companies from closing the merger while the court considers their objections, Variety and Reuters reported. The order runs for 14 days, with a hearing on a preliminary injunction scheduled for Aug. 3, according to those reports.
In her ruling, Martínez-Olguín said the court could presume the proposed combination may run afoul of antitrust law because of the merged company’s market share, Variety and Reuters reported. She also found that the states had shown that harm could occur without a temporary restraining order.
States sought more time to block closing
The case was brought by attorneys general from California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington, according to The Verge. The states asked the court to delay the deal for 28 days while they argued that the merger should be blocked.
The states said the combination would create what they called a “media behemoth” and reduce competition, The Verge reported. They also warned that if Paramount and Warner Bros. Discovery were allowed to close the transaction before the court acted, the companies could take steps that would be difficult to reverse.
Those steps could include layoffs and sharing business information between the companies, according to the states’ argument described by The Verge. The judge did not grant the full 28-day pause the states requested, but the 14-day order prevents immediate closing while the next stage of the case proceeds.
Timing could become costly
The merger agreement carries a financial clock for Paramount. If the transaction has not closed by Sept. 30, Paramount will begin owing Warner Bros. investors millions of dollars per day, The Verge reported.
The reports did not say whether Paramount or Warner Bros. Discovery immediately responded to the temporary order. The next court hearing, set for Aug. 3, will determine whether the pause extends beyond the current restraining order.
The ruling puts one of the entertainment industry’s largest pending combinations under sharper court scrutiny. For now, Paramount’s push to buy Warner Bros. Discovery remains alive, but the companies cannot move ahead on the original timetable while the temporary order is in place.
This story draws on original reporting from The Verge.