Paramount reached an agreement Friday with a coalition of state attorneys general led by California to postpone the Warner Bros. Discovery merger until after an antitrust trial.
The company entered into the agreement in San Francisco federal court Friday, agreeing it will not finalize the $110 billion transaction until five days after a trial of the states’ lawsuit is held, or June 1, 2027, whichever is earlier.
“Today’s agreement is a significant win because the result is exactly what we have sought from the outset: a direct path to a trial based on the evidence,” a Paramount representative said, according to Variety.
“This is the fastest and clearest way to prove that this transaction is good for competition, good for consumers, and good for creators, a conclusion dozens of competition authorities around the world have already reached. Plaintiffs’ market definitions bear no relationship to the realities of today’s marketplace and cannot withstand scrutiny. We look forward to proving our case at trial.”
The stipulation stems from a July 13 lawsuit brought in the Northern District of California by a 12-state coalition arguing the planned merger would violate federal antitrust law.
California Attorney General Rob Bonta said Friday that if the court finds in favor of the states, the merger would be blocked pending appeal.
“Our argument against this illegal merger is straightforward: When too few corporations have too much power in markets central to American life, it makes things more expensive, and it makes things worse,” Bonta said. “Today’s agreement is great news for audiences, movie theaters, and the many people who write, build, and create the art, news, and entertainment so many of us enjoy. We are eager to continue to make our case in court and celebrate another tremendous win in our effort to ensure this unlawful merger never sees the light of day.”
The judge set an Aug. 3 hearing in the matter but Paramount is seeking a three-day evidentiary hearing late next month in order to cross-examine the states’ witnesses.
After the states filed suit, the Writers Guild of America sued to block the deal on the grounds it would cause harm to writers and shrink the labor market.
On Wednesday, the WGA filed a bid for a preliminary injunction to halt the takeover.
The union’s motion seeks to bar Paramount and WBD from “closing or otherwise consummating” the deal or taking any further steps to consolidate their operations.
The guild alleges Paramount’s pending acquisition of WBD would reduce opportunities, lower pay and worsen working conditions for writers. The union argues that the elimination of a key competitor and the creation of a dominant firm would reduce the quantity and variety of theatrical films and television series as the merged company would have a greater ability to reduce output.
Furthermore, WGA asserts that the merger would increase the ability for the few remaining companies to tacitly coordinate to further suppress competition for writers’ work.
A Paramount spokesperson previously said the planned merger “is lawful, pro-competitive, and will benefit consumers, creators, workers, and the entertainment industry.”
The company also said Wednesday that the European Commission has formally cleared the acquisition, adding to approval from antitrust and competition authorities in the United States, Australia, Brazil, Canada, China, Kuwait, Montenegro, New Zealand, North Macedonia, Saudi Arabia, Serbia, South Africa, South Korea, Ukraine and the regional competition authority for the Common Market for Eastern and Southern Africa.