Paramount Skydance has agreed to delay its purchase of Warner Bros. Discovery to as late as next June as David Ellison\u2019s media company mounts its defense to the antitrust challenge brought by California Atty. Gen. Rob Bonta and his coalition of 11 other state attorneys general.<\/p>\n
The major concession comes as Paramount was facing an Aug. 3 hearing to try to convince U.S. District Judge Araceli Mart\u00ednez-Olgu\u00edn that its proposed $111-billion deal \u2014 which would reshape Hollywood with the combination of two historic studios \u2014 would not violate U.S. antitrust laws.<\/p>\n
The judge appeared to be leaning toward the arguments of the state attorneys general, who have alleged that the proposed union of two big film studios and television networks including HBO, CBS, CNN, Comedy Central, Nickelodeon and TBS, runs afoul of the 112-year-old Clayton Antitrust Act.<\/p>\n
In a stipulation filed Friday, Paramount said it would hold off on closing its blockbuster purchase until after the states\u2019 antitrust case can be decided in a trial before the Oakland-based judge or by June 1, 2027, whichever date comes first. <\/p>\n
The move came after Mart\u00ednez-Olgu\u00edn issued a temporary restraining order earlier in the week \u2014 requested by Bonta and the others \u2014 which paused the deal until next month\u2019s preliminary injunction hearing, when she was set to decide whether a lengthy moratorium should be imposed.<\/p>\n
Privately, Paramount officials were worried they might lose that round before Mart\u00ednez-Olgu\u00edn, so, during negotiations with the states, Paramount stipulated that it would not close the deal on its preferred timetable.<\/p>\n
Paramount had wanted to finalize the takeover this month \u2014 or at least have it wrapped up by Sept. 30.<\/p>\n
In a statement, Bonta celebrated the delay as \u201cgreat news for audiences, movie theaters, and the many people who write, build, and create the art, news, and entertainment so many of us enjoy.\u201d<\/p>\n
\u201cOur 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,\u201d Bonta said. <\/p>\n
Now, Paramount will incur added deal costs and significant legal fees as it prepares the case for a full-blown trial. Paramount, in a statement, framed the delay as \u201ca significant win\u201d for the company. <\/p>\n
\u201cThe result is exactly what we have sought from the outset: a direct path to a trial based on the evidence,\u201d a Paramount spokesperson said in a statement. \u201cThis 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. We look forward to proving our case at trial.\u201d<\/p>\n
On Wednesday, the European Commission gave its blessing, allowing the Paramount-Warner merger to move forward in European countries. More than 40 jurisdictions have given their consent. The U.S. Justice Department last month signed off \u2014 an approval that had been expected because of President Trump\u2019s desire to see the Ellison family own CNN.<\/p>\n
Paramount shares slipped on the news, falling 3.3% to $8.21 \u2014 marking their lowest trading day of the year. Warner\u2019s stock gains since Monday\u2019s restraining order ruling were suddenly erased. Warner shares finished at $25.77 \u2014 17% lower than Paramount\u2019s deal offer.<\/p>\n
Now, Paramount will have to pay Warner Bros. Discovery investors more than the $31 a share it previously promised. <\/p>\n
In a show of confidence earlier this year, the company boasted it would quickly secure the necessary regulatory approvals to finalize the Warner purchase by late September. As an added incentive to win over investors, the company said it would pay so-called \u201cticking fees\u201d should the deal encounter snags.<\/p>\n
Those fees of 25 cents a share per quarter begin Oct. 1, adding about $650 million to the price tag each quarter until the deal closes. If Paramount is unable to close the deal by June 1, it would owe Warner Bros. Discovery a $7-billion breakup fee.<\/p>\n
Larry Ellison, co-founder of software giant Oracle, is bankrolling his son\u2019s ambitions to acquire a second major entertainment company<\/a> in less than a year. The Ellison family acquired the smaller Paramount in August last year.<\/p>\n