Judge temporarily halts Paramount Skydance deal for Warner Bros Discovery
A federal judge gave 12 states two weeks to press their antitrust case against the proposed media merger.
By Lucas Ferreira · Science & Environment Writer
3 min read
A federal judge has temporarily slowed Paramount Skydance’s planned acquisition of Warner Bros Discovery after 12 states sued to block the deal on competition grounds. The order gives the state coalition, led by California, two weeks to make its case before the court considers whether the merger should remain on hold.
US District Judge Araceli Martinez-Olguin issued the order Monday in response to the states’ lawsuit, Al Jazeera and Reuters reported. The case was filed in federal court in California a week earlier and challenges a deal that would combine Paramount Skydance with Warner Bros Discovery, whose holdings include New Line Cinema and CNN.
Judge Martinez-Olguin set an August 3 hearing on the states’ request, according to Al Jazeera and Reuters. A final decision from the court could take months, the outlets reported.
States challenge deal on competition grounds
The states argue that the merger would leave consumers with fewer content choices and would cause large-scale job cuts, according to their lawsuit as described by Al Jazeera and Reuters. The deal has faced scrutiny in Hollywood and Washington over concerns that it could reduce work in film and television production and place CBS News and CNN under the same corporate owner.
The delay could become costly for Paramount Skydance. Under the merger financing terms, Paramount would have to pay $650 million per quarter starting September 30 if the transaction is held up, according to the company’s merger agreement cited by Al Jazeera and Reuters.
The agreement also includes a 25-cent-per-share fee, equal to about $7 million a day, according to the same reporting. Paramount Skydance shares fell after news of the pause but recovered to trade roughly flat by midday, while Warner Bros Discovery shares remained lower, down 3.8 percent in midday trading, Al Jazeera and Reuters reported.
News ownership concerns
Media freedom advocates have warned that the merger could reduce the range of news viewpoints available to audiences, according to Al Jazeera. The concerns include the possibility that Paramount’s Larry Ellison, described by Al Jazeera as a close ally of President Donald Trump, and his son David Ellison, the company’s CEO, could seek changes at CNN similar to moves made at CBS.
Al Jazeera reported that those CBS changes included the hiring of Bari Weiss, a right-wing opinion writer with no previous television experience, to lead a major US broadcast news channel. Reports that Weiss could influence CNN’s direction if the merger is completed have led some prominent network figures to weigh departures, according to Al Jazeera; Paula Reid is moving to MS Now, and Anderson Cooper has reportedly raised the possibility of leaving if Weiss takes over.
Rodney Benson, a professor in New York University’s department of media, culture, and communication, said in an analysis cited by Al Jazeera that the merger would set “a dangerous precedent” if regulators favored a media owner because of coverage that pleased the president. Benson also said the transaction would increase concentration among major professional news outlets and social media, reducing consumer choice.
Writers Guild files separate lawsuit
The states are not the only challengers. The Writers Guild of America filed its own lawsuit Tuesday seeking to stop the merger, according to Al Jazeera and Reuters.
WGA West President Michele Mulroney said the deal would “eliminate competition in an already consolidated industry” and threaten entertainment workers’ livelihoods and creative variety in television and film, according to the report.
Paramount Skydance representatives did not respond to Al Jazeera’s request for comment.
This story draws on original reporting from Al Jazeera.