Paramount won’t be able to close its $111 billion takeover of Warner Bros. Discovery until Aug. 18 at the earliest, with the court extending the temporary restraining order another 14 days.
U.S. District Judge Araceli Martínez-Olguín issued the extension to allow lawyers for the studio and the states looking to block the deal to come to an agreement on the schedule and format for legal proceedings on a preliminary injunction, which would freeze the transaction until the case is decided if granted.
The states alleged that the acquisition will substantially throttle competition in wide-release and top-grossing theatrical distribution and cable licensing in violation of antitrust laws. Separately, the Writers Guild of America filed a lawsuit claiming that the merger will result in lower compensation and worse deal terms.
The court on Monday granted the states’ bid to pause the deal. Legal jockeying followed, with Paramount urging the court to hold a three-day evidentiary hearing next month. That would allow it to “address critical factual issues involving market definition, real-world competitive dynamics, barriers to expansion, and incentives,” wrote Jeffrey Kessler, a lawyer for the studio, in a court filing. Paramount intends to put on expert witnesses and cross-examine the states’ experts to undermine arguments that the merger will suppress the markets at issue in the case. It has maintained that the states’ understanding and calculation of the markets are faulty.
The states opposed the bid, arguing that a multi-day hearing isn’t appropriate at the preliminary injunction stage and that Paramount is essentially asking for a trial without giving them proper time.
For Paramount, the Sept. 30 deadline to close the deal is a key consideration. It previously offered not to consummate the acquisition for up to a month if the court agreed to schedule preliminary injunction proceedings at the end of August in order for a decision to be rendered before the ticking fee is triggered. The ticking fee in the deal contract would result in a $6.9 million per day penalty if the transaction isn’t closed by Sept. 30.
The decision on the preliminary injunction will be key. If it’s not granted, Paramount has signaled that it will close, leaving the states to try and unwind the merger.
The court will consider arguments on the motion on Aug. 3.
