Judge delays ruling on California's bid to freeze Paramount's $111B takeover of Warner Bros. Discovery

A judge on Friday declined to issue a ruling from the bench regarding California’s request for a temporary restraining order freezing Paramount's planned takeover of Warner Bros. Discovery (WBD). Paramount CEO David Ellison is seeking to acquire WBD in a $111 billion deal that was expected to close during the third quarter of this year, but California Attorney General Rob Bonta is leading a group of 12 state attorneys general who filed a lawsuit challenging the merger.

The lawsuit claims the megadeal 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 U.S.' The lawsuit, filed in the U.S. District for the Northern District of California, claims that the merger violates Section 7 of the Clayton Act, which holds that mergers that may substantially lessen competition or tend to create a monopoly are illegal.

A TRO hearing on Friday got deep into antitrust law, with Paramount arguing the merger would actually increase competition while the state insists that combining two major Hollywood studios would hurt the industry while giving too much power to the company. District Judge Araceli Martínez-Olguín promised to issue a ruling by July 22.

Paramount is seeking to move forward as soon as possible to avoid exorbitant ticking fees, a term for charges that accrue as the merger is delayed.

The Justice Department (DOJ) announced last week it has closed its antitrust investigation into Paramount Skydance's proposed acquisition of WBD, concluding the transaction is not likely to harm competition or American consumers. The Antitrust Division said its eight-month review examined more than two million documents and found the deal could strengthen competition across the media and entertainment industry, including in streaming video, traditional television and theatrical film distribution. However, state attorneys general retain independent authority under antitrust laws.

Ellison, the son of billionaire Oracle co-founder Larry Ellison, took control of Paramount last year when Skydance Media and Paramount Global completed an $8 billion merger. Adding WBD to his portfolio would make the younger Ellison one of Hollywood’s most powerful people.

Paramount fired back Monday shortly after the complaint was filed, saying the lawsuit 'reflects a fundamentally flawed application of the antitrust laws and is wrong on both the facts and the law.' 'We will vigorously defend the transaction and demonstrate that this challenge is inconsistent with sound competition policy and the competitive realities of the media marketplace. Delaying this transaction will only harm entertainment workers who have already suffered over recent years as technology has disrupted their livelihood and...'