A federal judge on Monday slapped Paramount’s $110 billion acquisition of Warner Bros. Discovery with a temporary restraining order, after a group of 12 Democratic state attorneys general led by California sued to block the deal, arguing it would harm consumers and reduce competition.
US District Judge Araceli Martínez-Olguín of the Northern District of California, a Biden appointee, issued the order barring Paramount from closing the transaction for 14 days, scheduling an Aug. 3 hearing for the states’ motion for a preliminary injunction – a more serious potential freeze of the mega-merger.
Executives at Paramount and Warner Bros. had reportedly been expecting such a decision – but the real concern is whether a preliminary injunction will be granted, pushing the tie-up dangerously closer to a crucial September deadline.
If the deal is not completed by Oct. 1, a costly “ticking fee” kicks in, adding 25 cents per share to the cost of the acquisition for each quarter it is not completed – coming to a painful $7 million per day.
“We are confident the evidence will demonstrate that the State AGs’ antitrust arguments are without merit as their alleged markets and claims of anticompetitive effects are without any basis in modern market realities,” a Paramount spokesperson told The Post in a statement.
“This merger is lawful, pro-competitive, and will benefit consumers, creators, workers, and the entertainment industry. We will continue to vigorously defend the transaction and will look forward to the hearings on the substance of the State AGs’ action.”
Warner Bros. Discovery declined to comment. The White House did not immediately respond to The Post’s request for comment.
The deal would combine HBO Max, Paramount+, HBO, CBS, CNN and thousands of movie titles under one company, led by David Ellison, the son of Oracle billionaire and close Trump ally Larry Ellison.
California Attorney General Rob Bonta, a Dem, has argued the merger would lead to “higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately, audiences on every sofa and movie theater seat in the US.”
The states’ July 13 lawsuit argued the new conglomerate would control nearly one-third of the US theatrical film distribution market and almost one-third of the nation’s basic cable programming.
It was filed just days after reports that advisers close to Ellison had encouraged him to consider relocating Paramount’s headquarters and shifting as much as $30 billion in planned spending outside California if Bonta sued to stop the merger.
“From the attorneys general lawsuit perspective, the longer they can play this out, the more negotiating leverage they can have,” Derek Reisfield, a former media executive at CBS News and McKinsey who co-founded MarketWatch, told The Post.
“This is all about a negotiation, because if you step back and look at the monthly churn for HBO Max and Paramount+…the business models are not sustainable. They have to do the deal.”
Reisfield said the legal battle could potentially end with a settlement from Paramount, though that would take time and potentially force Paramount to give up some of the WBD cable assets included in the deal, like Cartoon Network.
CNN, on the other hand, is likely safe.
“If I were David Ellison, I would not want to give up CNN,” Reisfield said. “Second-tier television networks, some of them are likely up for negotiation.”
Any pause on the deal keeps the future ownership of CNN in limbo for weeks longer. The network’s top anchors have reportedly grown panicked over the network’s future independence after David Ellison installed Bari Weiss to run CBS News following his acquisition of Paramount.
Paramount has repeatedly defended the merger, noting that it has been greenlit by several global regulators – including the Trump administration’s Justice Department, as well as authorities in Australia and China – and sticking to its goal to close the deal by the end of September.
