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Paramount will not be able to finalize its acquisition of Warner Bros. Discovery is valued at $111 billion until August 18 at the earliest, with the court extending the temporary restraining order for another 14 days.
U.S. District Judge Araceli Martinez Olguin issued the extension to allow lawyers for the studio and the states seeking to block the deal to reach an agreement on the timeline and format of the legal proceedings on a preliminary injunction, which would freeze the deal until the case is decided if granted.
The states alleged that the takeover would significantly stifle competition in the higher-grossing broadband theatrical distribution and cable licensing in violation of antitrust laws. Separately, the Writers Guild of America filed a lawsuit claiming the merger would result in lower compensation and worse deal terms.
The court on Monday granted the states’ request to temporarily halt the deal. Legal maneuvering ensued, with Paramount urging the court to hold a three-day evidentiary hearing next month. This would allow it to “address crucial factual issues involving market definition, real-world competitive dynamics, barriers to expansion, and incentives,” Jeffrey Kessler, a lawyer for the studio, wrote in a lawsuit. Paramount intends to use expert witnesses and cross-examine state experts to undermine arguments that the merger would suppress the markets involved in this case. It has confirmed that the states’ understanding and calculations of markets are wrong.
The states opposed the offer, arguing that a multi-day hearing was not appropriate at the preliminary injunction stage and that Paramount was essentially asking for a trial without giving them the proper time.
For Paramount, the September 30 deadline to close the deal is a key consideration. It had previously offered to hold off on the takeover for up to a month if the court agreed to schedule preliminary injunction proceedings at the end of August in order to issue a decision before the visa fees take effect. The visa fee in making the deal will result in a fine of $6.9 million per day if the transaction is not closed by September 30.
The decision on the preliminary injunction will be key. If it is not granted, Paramount has indicated it will close, leaving the states to try to undo the merger.
The court will consider arguments related to the request on August 3.
