Paramount’s Warner Bros. Deal Faces New Delay as Judge Allows Merger Opponents Input

The ongoing battle over Hollywood’s most significant merger in years has taken another unexpected turn. Just when it seemed poised for completion, the proposed merger between ‘Paramount Skydance’ and ‘Warner Bros. Discovery’ has encountered fresh hurdles. This deal, which has already faced numerous lawsuits, restraining orders, and a costly countdown, is now being slowed down by a ruling from the presiding judge.

Valued at around $110 billion, this merger aims to unite two iconic film studios, along with CBS, CNN, and the streaming platforms Paramount+ and HBO Max. A coalition of 12 state attorneys general, spearheaded by California’s Rob Bonta, filed a lawsuit to block the merger on July 13. Following this, Judge Araceli Martinez-Olguin issued a temporary restraining order in July, leading Paramount to agree to pause the transaction until either a trial or June 1, 2027, whichever comes first.

The pressure on Paramount intensified as the merger terms stipulated that the company would incur an additional $7 million daily fee to WBD shareholders starting October 1, on top of the already agreed $81 billion. CNBC estimated this additional fee could amount to approximately $650 million per quarter. Paramount also sought to compel the states and the Writers Guild of America to post a $1.88 billion bond, a request that was later rendered moot.

On Monday, Paramount reached a settlement with the 12 attorneys general, and the WGA resolved its lawsuit shortly thereafter. The proposed consent decree mandates that Paramount maintain the Paramount Studios and Warner Bros. lots in California for a minimum of five years, invest an extra $300 million annually in U.S. film production, and release at least 30 films per year in theaters. Additionally, it establishes an independent board to oversee editorial independence at CNN and CBS News.

Bonta clarified that the settlement does not imply support for the merger, and sources told Variety it does not necessitate any significant divestitures. Critics of the deal accused him of capitulating, while some other attorneys general expressed disappointment with the resolution.

The consent decree still requires judicial approval, and CEO David Ellison informed staff that he anticipated the deal’s closure within approximately two weeks. However, a twist emerged on Thursday. Just hours before an 11 a.m. PT hearing that many expected would be a mere formality, the judge granted a motion from the Block the Merger coalition to establish a schedule for amicus briefs regarding the proposed consent decree.

According to the judge’s order, amicus briefs must be submitted by 12:01 a.m. PST on September 25, with no extensions permitted. Deadline reported that this ruling makes it highly unlikely the deal will receive formal approval on Thursday, potentially leading to a costly delay in finalizing the merger.

Paramount and WBD opposed this move, arguing that allowing external parties to delay the closing without filing their own antitrust actions or meeting the Clayton Act’s standards for an injunction would be inappropriate. Nevertheless, the judge permitted the briefs, having previously indicated she had unresolved questions regarding the factual and legal foundations of the decree.

However, this does not spell doom for the deal. Bonta’s office noted that it is not uncommon for a court to withhold immediate approval of a settlement, and the merger has already secured regulatory approvals in over 65 countries. The FCC has also sanctioned a foreign ownership structure for the merged entity.

The implications of this merger extend far beyond corporate interests. The Writers Guild has voiced its opposition, asserting that the deal could harm writers and the industry, supported by open letters from actors, directors, producers, and crew members. Advocates, including Paramount, argue that the merger will generate more content and enhance the company’s competitiveness against giants like Netflix and Amazon.

Should the deal proceed, Ellison’s empire would encompass two major movie studios, two global streaming services, and two prominent news networks, as reported by Axios. This is why every court filing is scrutinized as an indicator of how swiftly this transformation might occur.

For now, the timeline remains uncertain. The amicus deadline is imminent, and it will take additional time for the judge to consider those arguments.

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