Paramount and Warner Bros Discovery appear to have jumped out of the frying pan and into the fire after a US federal judge put their merger on hold for two weeks.
US district judge Araceli Martínez-Olguín has ordered a temporary halt on 20 July, blocking the $110bn merger from being completed until a further hearing.
Martínez-Olguín paused the deal for two weeks after a dozen US states filed lawsuits asserting that the merger would violate antitrust laws and harm competition. The judge agreed that the states made substantive points and said the pause would provide time to examine whether the agreement should go forward.
“This is a critical first win in our case to ensure this megamerger never sees the light of day,” California Attorney General Rob Bonta said in a statement, who is leading the case for the states.
“History tells the tale of what happens when a few people have great power over markets that are central to Americans’ lives: fewer opportunities for more people, worse products and services for all people.”
Sports rights are a prominent part of the concerns, as Paramount and Warner Bros coming together would see Paramount+, CBS, TNT and other platforms fall under the same ownership.
TNT currently holds US rights to the NBA, MLB, the NCAA Division I Men’s Basketball Championship, the NHL and other competitions, while Paramount+ holds the rights to UEFA club competitions and the UFC.
Those against the merger argue that live sports rights are already limited and expensive, a problem that would only be amplified if two major holders combine. An example of where this could have played out is when Paramount outbid TNT for UEFA Champions League rights in 2025.
Other concerns are about the entertainment side of the business, with critics warning that combining the two companies’ film and television output could reduce competition and choice for consumers.
Despite the pause on the merger, the 12 US states are not happy with the length of the pause, saying it is too short and does not give them enough time to fully present their antitrust case.
Insider Sport has contacted Paramount for comment.
How Paramount fought off Netflix
This is not the first time that the Paramount and Warner Bros deal has faced obstacles, with the merger almost falling through entirely a few months ago. Netflix walked away from a rival bid for Warner Bros Discovery in February, leaving Paramount as the last company standing in a bidding war that had lasted months.
Netflix Co-Chief Executive Officers Ted Sarandos and Greg Peters said that matching Paramount’s improved offer would no longer be “financially attractive,” describing the transaction as a “nice to have” rather than a “must have.”
The decision came after Netflix had spent weeks as the frontrunner, having initially agreed to acquire Warner Bros’ studio and streaming business for roughly $72bn in equity value.
Paramount responded with an all-cash tender offer for the entire company, and after months of renewed bids, lawsuits and boardroom pressure, WBD eventually gave Netflix a short window to match Paramount’s revised $31 per share offer.
Netflix declined, allowing Paramount to push ahead with an agreement to acquire the whole of Warner Bros Discovery rather than just its studio and streaming assets.
“Warner Bros. is a world-class organisation, and we want to thank David Zaslav, Gunnar Wiedenfels, Bruce Campbell, Brad Singer and the WBD Board for running a fair and rigorous process,” Netflix said in a statement at the time.
“We believe we would have been strong stewards of Warner Bros.’ iconic brands, and our deal would have strengthened the entertainment industry.”
