Stay informed with free updates
Simply sign up to the Media myFT Digest — delivered directly to your inbox.
A federal judge on Monday temporarily paused Paramount Skydance’s acquisition of Warner Bros Discovery, siding with a dozen Democratic-led states that said the $110bn deal would smother competition in Hollywood.
US District Judge Araceli Martínez-Olguin granted the states’ request to temporarily halt the merger while she weighs the legal challenge.
“Paramount and Warner Bros will continue to operate as separate, viable companies competing in the marketplace while they wait for the Court to adjudicate this case,” she said.
Martínez-Olguin set a hearing for August 3 at which she will hear arguments over whether to extend the pause.
The order calls into question whether the billionaire Ellison family, which controls Paramount, can complete the deal in its ideal timeframe.
Some close to the group say that Paramount aimed to finalise the deal as early as this month ahead of an October 1 deadline, when the company would owe $650mn to WBD shareholders each quarter the deal is not finalised.
The fee was offered by Paramount to secure the merger amid competition from Netflix, as the US streamer faced claims it would struggle to win over regulators.
Last week, a coalition of a dozen Democratic state attorneys-general led by California’s Rob Bonta sued to block the deal, saying it would weaken competition for basic cable channel licensers as well as blockbuster movie creators and distributors.
Separate antitrust complaints were later filed by the Writers Guild of America and consumers.
James Weingarten, a partner at Milbank representing California, said at a hearing on Friday that former competitors would become colleagues if the acquisition was allowed to close.
“It is the largest merger in Hollywood history,” he said. “We may not agree on a lot, but we agree with the defence what they put on page one of their papers: It is an industry-transforming merger.”
Lawyers for Paramount argued that combining the companies would be “complementary”, not anti-competitive, and that “cord-cutting” has reduced the power of owning cable channels.
Paramount chief executive David Ellison, whose father is Oracle co-founder and Donald Trump ally Larry Ellison, has committed to releasing 30 movies a year to ease concerns about stifling competition.
The states urged the judge to give “no weight to unenforceable promises from executives”, but Paramount’s counsel said the company had offered to let the states enforce it and saw “no interest” in return.
“This is completely a red herring by them to say the promise is not enforceable,” said Jeffrey Kessler, a partner at Winston Taylor representing Paramount.
Monday’s ruling marks an early victory for the states in their bid to permanently block the creation of one of the world’s largest media and entertainment groups.
The US Department of Justice approved the deal last month after it concluded the acquisition would not likely harm competition or American consumers. Trump, an ally of the Ellisons, has praised the merger.
EU regulators are expected to approve the merger this month with some concessions.
Yet in the UK, culture secretary Lisa Nandy said she was “minded” to intervene in the case on public interest grounds concerning media plurality, and push for competition and media watchdogs to scrutinise the deal.
Hollywood figures from director JJ Abrams and actors Emma Thompson and Ben Stiller have opposed the deal, while journalists at CBS News and CNN have signalled concern that the two newsrooms may merge.
Credit: Source link
