Oh, boy — here we go.
The fate of the $111 billion Paramount–Warner Bros. merger could come down to a single federal judge, who has temporarily blocked the proposed deal, giving the 12-state coalition more time to pursue its antitrust challenge.
Judge Araceli Martinez-Olguin issued a 14-day temporary restraining order after finding that the states had raised serious questions about whether the merger could violate antitrust laws. Paramount and Warner Bros. will remain separate companies while the court considers whether to issue a longer preliminary injunction.
Take note that this is just 14 days—David Ellison is desperately hoping it doesn’t go any further. That’s because if the Paramount–Skydance/Warner Bros. Discovery merger is delayed beyond September 30, Paramount Skydance will have to pay Warner Bros. Discovery shareholders a “ticking fee” of roughly $6.8M .. per day. Yikes.
The next major step is a hearing on August 3 over whether to extend the block through the antitrust case. In merger disputes, that decision is often the whole ballgame: if the deal is allowed to close, it’s extremely difficult to unwind later. If a preliminary injunction is granted, however, mergers frequently fall apart before ever reaching trial.
However, the biggest takeaway for me is this: the judge signaled she was skeptical of Paramount’s argument that benefits in the streaming market could outweigh competitive harms in other markets, noting that courts generally do not allow efficiencies in one market to justify reduced competition in another. It’s a sign that the future of this merger has been granted over to a judge that’s not on the side of Paramount/Skydance.
This all comes just over a week after a coalition of 12 states filed an antitrust lawsuit seeking to block the proposed $111 billion merger between Paramount/Skydance and Warner Bros. Discovery. The deal had already been approved by the Department of Justice last month. The coalition includes the attorneys general of Arizona, California, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.
From the outside looking in, there’s no doubt in my mind that this merger, like so many things these days, has become a blue-versus-red battle. The politics surrounding the deal now seem just as influential as the business and antitrust questions. We must also remember that the acquisition of CNN is part of this merger, and the fear among blue states is that David Ellison could very well turn it into a conservative outlet.
So, this is interesting. Two movies. That's what David Fincher says he was handed when Quentin Tarantino's screenplay for “The Adventures of Cliff Booth” landed on his desk.