The decision to place a temporary pause on Paramount’s $111 billion acquisition of Warner Bros Discovery by a US federal judge “doesn’t settle anything,” according to one analyst.
US District Judge Araceli Martínez-Olguín of the Northern District of California has paused the deal for 14 days while she considers a preliminary injunction, which would block the merger for the duration of the litigation and impose substantial costs on Paramount.
The antitrust case, brought by 12 attorneys general, argues that the deal would combine two of Hollywood’s five major film distributors and two of the five major owners of basic cable TV channels, “inflicting substantial harm on movie theatres, basic cable distributors, and ultimately, audiences nationwide”.
Analyst Mike Proulx from Forrester said the judge’s ruling “kicks the can a bit further down the road”.
“The states cleared the first procedural hurdle by convincing the court that there are serious enough antitrust questions to warrant a brief pause,” added Proulx. “The preliminary injunction hearing on August 3rd will provide the first real indication of how the court views the states’ market definition and whether it reflects the way competition actually works in today’s entertainment market.”
In the UK and Europe, the deal is already under investigation. The European Commission has opened an investigation into foreign investment, with Saudi Arabia’s Public Investment Fund (PIF), Abu Dhabi-based L’imad Holding Company, and Qatar Investment Authority (QIA) providing $24 billion to help finance the $111 billion deal.
The UK’s Competition and Markets Authority is considering whether the deal would result in “a substantial lessening of competition within any market or markets in the United Kingdom for goods or services”.
