U.S. District Judge Araceli Martínez-Olguín is expected to rule by July 22 on a temporary restraining order (TRO) that would prevent Paramount's $111 billion acquisition of Warner Bros. Discovery (WBD) from closing for up to 28 days. This comes after 12 state attorneys general, led by California’s Rob Bonta, filed a lawsuit challenging the merger on antitrust grounds. The states allege the deal would significantly reduce competition in wide-release theatrical films, anticipated blockbuster releases, and basic cable channel licensing, arguing the combined entity would control approximately 27% of the domestic box office and over 30% of large-budget wide-release films.
Paramount’s attorney, Jeffrey Kessler, informed the court that the transaction would not close before July 22 and voluntarily offered to delay completion for 28 days to avoid the TRO. Paramount is pushing for preliminary injunction proceedings to conclude by the end of August, with a decision before September 30. This timeline is crucial for Paramount due to a penalty clause in its agreement with WBD, which stipulates approximately $7 million per day, or $650 million per quarter, in fees if the deal doesn't close by September 30. The states, however, have proposed a much later hearing date in April 2027 to gather more evidence and hear from a broader range of witnesses, including competitors and customers, arguing that an expedited schedule primarily benefits the defendants.
Paramount disputes the states' market calculations, contending that they fail to account for the competitive landscape, including streaming services, smaller distributors, and the entry of deep-pocketed technology companies like Apple and Amazon's MGM Studios into film distribution. The company argues that its cable networks are largely complementary, not direct substitutes, and that the declining pay-TV market already weakens programmers' negotiating positions. While the U.S. Justice Department has closed its antitrust investigation without objections, stating the deal could strengthen competition, state attorneys general retain independent authority to challenge the merger. Separately, the European Union's decision on the $110 billion transaction is also expected around July 22, and the UK's regulator is considering intervention.
The potential delay and the ongoing legal battles introduce significant financial risks for Paramount. Beyond the daily ticking fee, there's a $7 billion termination fee payable to WBD if the deal collapses due to regulatory issues. Other parties, including the Writers Guild of America, a Paramount shareholder, and a group of consumers, have also filed lawsuits, though a consumer-led preliminary injunction request was denied. Paramount's CEO David Ellison aims to close the $111 billion deal in the third quarter of this year, having already received approvals from multiple countries and WBD shareholders.
