A federal judge ordered Paramount and CNN parent company Warner Bros. Discovery to halt their merger for at least two weeks, as a coalition of states led by California argue the deal will “extinguish competition” across the entertainment industry.
The temporary restraining order, granted Monday after the judge heard arguments from both sides last week, halts the merger while the court considers a ruling on a preliminary injunction. If approved, it would block the merger for the duration of the lawsuit.
In the court order, U.S. District Judge Araceli Martínez-Olguín said the states brought compelling evidence that the combined company will have substantial market share in the wide-release theatrical distribution market. On this market share alone, “the Court is persuaded that it can presume the proposed merger is likely to violate antitrust laws.”
While Paramount and Warner Bros. have raised criticisms of the state coalition’s case, they do not establish that the merger would not substantially lessen competition, Martínez-Olguín said.
In a statement, a spokesperson for Paramount said it is confident the evidence will demonstrate that the state coalition’s antitrust arguments are without merit.
“This merger is lawful, pro-competitive, and will benefit consumers, creators, workers, and the entertainment industry,” the spokesperson said in the statement.
Representatives for WBD declined to comment.
Last Monday, a coalition of state attorneys general filed its antitrust lawsuit to block the $110 billion acquisition. California, Arizona, Colorado, New Jersey and New York are among the 12 states involved in the lawsuit. Georgia, which remains a key nerve center for Warner Bros., is not one of the parties.
The coalition is arguing the combined media company, if allowed to merge, would control nearly one-third of theatrical motion pictures and nearly one-third of basic cable programming.
The deal would be the largest in Hollywood history. Combining Paramount and the Warner businesses would stitch together CBS, Atlanta-based TNT and TBS, Discovery, HBO, HGTV and other networks, along with intellectual property such as DC Comics and the Harry Potter film franchise. The combined company would have two major news operations under its belt — CBS News and CNN — and two streaming services.
Paramount said in its rebuttal to last week’s lawsuit that it would fight “any effort to block a merger that has clear benefits for consumers, creators, and the wider entertainment industry, and where the alternative is to entrench a failing status quo.”
Paramount targeted closing the deal as early as July 22, when all of their regulatory hurdles had been cleared. Some regulatory bodies around the world, including the United States, have already approved the deal, but it is still under review by the European Union and the U.K. As part of its initial agreement with Warner Bros., if the transaction does not close by Sept. 30, Paramount will pay a so-called “ticking fee” of 25 cents per share to Warner Bros. shareholders per quarter until closing.
A hearing has been scheduled for plaintiffs’ preliminary injunction motion on Aug. 3, according to the filing.
About the Author
Keep Reading
The Latest
Featured
