Judge Pauses Paramount-Warner Bros. Merger

A judge ordered a temporary halt to the Paramount-Warner Bros. merger on Monday, as a state coalition argues it would violate federal antitrust law, leading to higher prices and fewer movies and TV shows. Judge Araceli Martinez-Olguin issued the order after hearing argument from both sides on Friday morning. Paramount had previously agreed not to close the transaction before July 22. The 12-state coalition, led by California, brought a motion for the temporary restraining order, which will block the deal from closing for up to 28 days. The states are also seeking a preliminary injunction, which would block it until the judge rules on the merits of the states’ lawsuit. Popular on Variety In antitrust cases, the injunction is often the whole ballgame. If it is not granted, the deal is allowed to close and it becomes almost impossible to unwind later on. But if it is granted, the deal tends to fall apart before the underlying case can go to trial. Paramount has pushed for a hearing on the injunction with live witnesses, which would take place sometime in late August. The company hopes to get a ruling by early September. If the deal has not closed by Sept. 30, Paramount will start to owe millions of dollars a day to Warner Bros. investors. At the hearing, Martinez-Olguin suggested that Paramount had conceded it would not be harmed by a temporary pause. Jeffrey Kessler, arguing for Paramount, offered to stipulate that the transaction would not close for up to 30 days pending a hearing on the injunction motion. The states allege that the merger will harm competition in the basic cable and theatrical markets by combining two of the top three cable programmers and two of the top five film distributors. Paramount has pointed to the success of new entrants — A24, Amazon MGM, and others — to argue that the theatrical market is more competitive and dynamic than the state case makes it appear. Paramount also argues that the cable market is in decline, and that the court should thus not rely on the states’ estimates of market concentration.