It looks like the proposed merger between Paramount and Warner Bros. Discovery will take a little longer. Despite winning regulatory approval from the federal government and European regulators, the merger has been challenged by multiple lawsuits. So, Paramount has agreed not to close the merger until June 1, 2027, or until after the lawsuits are resolved.
The Legal Battle Begins…
Earlier this week, U.S. District Judge Araceli Martinez-Olguin granted a temporary restraining order that paused the transaction for 14 days. She later extended it by another 14 days, through to August 17. Now, both sides want to schedule a trial, but the judge still has to sign off.
A Paramount spokesperson said, “Today’s agreement is a significant win because the result is exactly what we have sought from the outset: a direct path to a trial based on the evidence. This is the fastest and clearest way to prove that this transaction is good for competition, good for consumers, and good for creators, a conclusion dozens of competition authorities around the world have already reached. Plaintiffs’ market definitions bear no relationship to the realities of today’s marketplace and cannot withstand scrutiny. We look forward to proving our case at trial.“
New York Attorney General Letitia James, who is representing one of a dozen looking to block the merger, added, “From the workers and artists who bring stories to life to the families who buy tickets at the box office, Paramount’s illegal takeover of Warner Bros. is a bad deal for all those who count on a competitive entertainment industry. Halting this merger while our case proceeds is a critical victory in our efforts to uphold the law and protect the film and television industries. I look forward to continuing our case to stop this illegal merger.“
A Delay Could be Very Costly
Paramount is already set to pay $110 billion for Warner Bros., but it could wind up costing even more the longer this legal battle drags out. There’s a $7 million-per-day “ticking fee” that Paramount must pay Warner Bros. for each day the transaction does not close after September 30. With a possible delay of another year, that figure could add up mighty quickly. Additionally, if the deal ends up falling apart, Paramount is on the hook for a $7 billion breakup fee.
Hollywood Stars Oppose the Deal
A growing number of industry figures have come out against the merger of the two studios. An open letter opposing the merger has been written and posted on the site Blockthemerger.com.
“We are deeply concerned by indications of support for this merger that prioritize the interests of a small group of powerful stakeholders over the broader public good. The integrity, independence, and diversity of our industry would be grievously compromised. […] Competition is essential for a healthy economy and a healthy democracy. So is thoughtful regulation and enforcement. Media consolidation has already weakened one of America’s most vital global industries—one that has long shaped culture and connected people around the world.“
Some of the stars who have signed the letter include JJ Abrams, Damon Lindelof, David Fincher, Denis Villeneuve, Adam McKay, Ben Stiller, Bryan Cranston, Catherine Keener, David Chase, Emma Thompson, Don Cheadle, James Schamus, Jane Fonda, Jason Bateman, Lin-Manuel Miranda, Noah Wyle, Tiffany Haddish, Mark Duplass, Joaquin Phoenix, Lily Gladstone, and more.
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