The lawsuit filed by 12 US states has put the merger of Paramount Pictures and Warner Bros. on hold temporarily. More details on that below. Just last week, we reported that 12 US states have sued Paramount Pictures over the major merger it’s pursuing with Warner Bros. Well, the lawsuit certainly did something. As reported ... Paramount-Warner Bros merger put on hold by a judge
The lawsuit filed by 12 US states has put the merger of Paramount Pictures and Warner Bros. on hold temporarily. More details on that below.
Just last week, we reported that 12 US states have sued Paramount Pictures over the major merger it’s pursuing with Warner Bros.
Well, the lawsuit certainly did something. As reported by Variety, a judge has now temporarily blocked the $110bn deal. The US Justice Department had already approved the merger, but the states, which include New York, California and Washington to mention a few, argued that such a deal would harm the industry by stifling competition and raising prices.
It’s certainly hard to disagree with that.
“Plaintiff States’ showing at least demonstrates that serious questions going to the merits remain, weighing in favor of preliminary injunctive relief,” judge Araceli Martinez-Olguin noted as she ordered the temporary restraining order.
“Paramount and Warner Bros. will continue to operate as separate, viable companies competing in the marketplace while they wait for the Court to adjudicate this case. The balance of equities, combined with the public’s vital interest in antitrust enforcement, therefore tips sharply in favor of the requested injunctive relief.”
The order is currently only set for 14 days, meaning neither company can start finalising the deal or joining the businesses in that time.
A further hearing has been scheduled for 3rd August to see whether to extend the order while the lawsuit is active.
There has been a lot of criticism towards the merger and worries that this could create a major media behemoth, something the lawsuit states explicitly. Hundreds of filmmakers and actors have publicly opposed the coming together of the two companies.
“Our industry is already under severe strain, in large part due to prior waves of consolidation,” a letter from Block The Merger campaign read in April. “We have witnessed a steep decline in the number of films produced and released, alongside a narrowing of the kinds of stories that are financed and distributed. Increasingly, a small number of powerful entities determine what gets made – and on what terms – leaving creators and independent businesses with fewer viable paths to sustain their work.”
Paramount is hoping for a quick solution in its favour and time isn’t on its side. If the merger deal doesn’t close by 30th September, it’ll have to start paying Warner Bros. investors $7m a day as a “ticking fee”, something it used to sweeten the deal with Warner Bros while bidding for the company. Something tells us it might be regretting that now.
It’s certainly a good sign that a judge has granted the order now, but whether it will make any real difference, remains to be seen.
