Click here to read the full article.
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.
“Plaintiff States’ showing at least demonstrates that serious questions going to the merits remain, weighing in favor of preliminary injunctive relief,” the judge wrote, adding that Paramount has acknowledged it will not be harmed by the delay until the end of September. “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 12-state coalition, led by California, brought a motion for the temporary restraining order. The states are also seeking a preliminary injunction, which would block it until the judge rules on the merits of the states’ lawsuit.
The judge granted a 14-day restraining order, which could be extended to as long as 28 days. She also set a hearing on the preliminary injunction for Aug. 3, though that date, too, could be delayed if the parties agree.
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. The company hopes to get a ruling on the injunction 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 on Friday, 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.
