paramount skydanceacquisition proposal warner bros discovery The company hit its first official roadblock when a judge granted a temporary restraining order against the merger as part of a lawsuit brought by the state attorney general.
California District Judge Araceli Martinez Holguin signed the order on Monday after hearing arguments from both sides in an Oakland courtroom on Friday. The order suspends all actions to proceed with the merger for 14 days.
Last week, a group of California attorneys general led by Rob Bonta filed a lawsuit seeking to block the $110 billion deal, citing antitrust concerns. The proposed agreement would combine under one roof the renowned film studios Paramount and Warner Bros., the CBS broadcast network, a vast portfolio of pay-TV networks including CNN, TNT, MTV and BET, and the streaming services Paramount+ and HBO Max.
A Paramount spokesperson said in a statement Monday that the company is “confident that the evidence will demonstrate that the state AG’s antitrust claims are without merit, as market claims and claims of anticompetitive effects have no basis in modern market realities.”
“This merger is legal, pro-competitive, and will benefit consumers, creators, workers, and the entertainment industry. We will continue to vigorously defend this transaction and look forward to a hearing on the substance of the state AG’s action,” the statement said.
Warner Bros. declined to comment.
The lawsuit said the proposed transaction would violate the Clayton Antitrust Act, a more than 100-year-old law that prohibits anticompetitive mergers and acquisitions. The lawsuit was filed by a group of states including Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.
In Monday’s order, Martinez-Holguin said a coalition of state attorneys general presented “compelling evidence that the combined company resulting from the transaction will have a significant market share in the broad theatrical distribution market.”
Jeffrey Kessler, Paramount’s lead trial attorney, told CNBC last week that the TRO was filed after Paramount indicated it intended to complete the deal by July 22, when all regulatory approvals are expected to be received.
At Friday’s hearing, Paramount’s lawyers proposed delaying the deal until mid-August to avoid a temporary restraining order.
Paramount said in a statement Monday that it “appreciates the court’s swift order,” adding that the order, like the proposal to postpone the transaction at Friday’s hearing, “maintains the status quo while the court considers the antitrust issues presented.”
Still, states could seek another temporary or preliminary injunction after 14 days, which would further delay a deal.
Another proposed media deal – $6.2 billion partnership with broadcast group owners nextstar media group And Tegna was suspended following a similar lawsuit and a preliminary injunction granted by a U.S. court. The trial in that case is also being led by Bonta and is expected to begin in mid-2027.
The Paramount-WBD deal is being reviewed by the European Union and the United Kingdom, which has set a new interim deadline of July 22nd.
The U.S. Department of Justice’s Antitrust Division approved the partnership in June, resolving the federal government’s concerns. It has also received approval from several global jurisdictions.
Paramount said it expects to complete the deal by the end of September.
If the deal is delayed beyond that, Paramount could incur additional costs, so-called ticking fees, if the deal is not completed after September 30th. This fee will be an additional 25 cents paid to WBD shareholders each quarter until the transaction closes, representing a cash value of approximately $650 million per quarter.
Paramount also agreed to pay a $7 billion penalty if the deal does not proceed due to regulatory concerns.
Bonta called the merger illegal and said it would result in “higher prices, lower quality, and less content for movies and television, hurting movie theaters, basic cable distribution companies, and ultimately the audience on every couch and movie theater seat in America.”
The states that filed suit against the deal said they believed the combined entity would control nearly one-third of movies and nearly one-third of basic cable TV programming.
Paramount defended the deal as “procompetitive.”
Paramount said in court documents filed Thursday that the temporary restraining order “presents one of the weakest merger challenges in modern antitrust history.”
The company said the partnership will “create higher quality content for consumers, encourage investment in job-creating film production, stabilize basic cable television (which is severely threatened by cord-cutting), and increase production of theatrical releases in a challenging entertainment environment.”
— CNBC’s Sarah Whitten and Stephen Desaulniers contributed to this article.
Correction: Jeffrey Kessler, Paramount’s lead trial attorney, spoke on CNBC last week. Previous versions incorrectly listed the time element. Paramount agreed to pay a $7 billion penalty if the deal does not proceed due to regulatory concerns. Previous versions listed prices incorrectly.
