The finish line for the $US110 billion Paramount takeover of Warner Bros just got a little further away.
An American federal court has issued a temporary restraining order for two weeks, during which time the merger cannot proceed.
It’s a legal technicality granted after 12 states, led by California, sued to block the merger between the two Hollywood mega studios on the grounds it would decrease competition for consumers and industry workers.
Sign up to The Nightly’s newsletters.
Get the first look at the digital newspaper, curated daily stories and breaking headlines delivered to your inbox.
By continuing you agree to our Terms and Privacy Policy.
But it is also a significant move because the granting of the order means the federal court judge, Araceli Martinez-Olguin, believes there is a reasonable chance of the lawsuit’s success, otherwise it would’ve been dismissed outright.
The two-week moratorium gives the judge time to further examine the arguments laid out in the case brought by the 12 states’ attorneys-general, which in addition to California are New York, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, Oregon and Washington.
“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,” the California attorney-general Rob Bonta said.
The proposed Paramount-Warner Bros Discovery deal is worth $US110 billion ($A158 billion). (EPA PHOTO) Credit: AAP
The lawsuit to block the merger relies on a 1914 legal act used to prevent monopolies and anti-competitive deals. The plaintiff’s argument is that combining Paramount and Warner Bros would concentrate too much power in theatrical distribution and in the cable TV market.
Paramount and Warner Bros have businesses in both areas and, according to the attorneys-general, the merged company would control one-third of both of those markets.
Paramount has called the suit “without merit” and has argued that the merger was pro-competition.
The case will return to court in early August.
The proposed merger between Paramount and Warner Bros has been a contentious move among many in the entertainment industry, including thousands of actors, filmmakers and crew who earlier this year signed an open letter in opposition.
The high-profile names involved in that campaign include Pedro Pascal, Emma Thompson, Glenn Close, Kristen Stewart, Noah Wyle, Javier Bardem, Jason Bateman, Florence Pugh and filmmakers Denis Villeneuve, Adam McKay, David Fincher, J.J. Abrams, Taika Waititi, David Chase, Tony Kushner and Celine Song.
A US judge has temporarily blocked Paramount Skydance’s merger with Warner Bros Discovery. (EPA PHOTO) Credit: AAP
The Hollywood unions have mostly stayed out of the fight officially, instead encouraging its members to voice their opposition on their own platforms. The exception is the Writers Guild of America which filed a lawsuit last week.
It said in its filing, “The proposed Paramount-Warner Bros merger threatens the economic and creative health of the American entertainment industry. (It) would eliminate competition for buying film and television writing, resulting in suppressed compensation, worse deal terms and reduced programming volume and diversity.”
The other potential obstacle comes out of the UK, where its culture secretary Lisa Nandy said last month that she was “minded” to ask for a probe by its communications and competition regulators. Nandy has kept her portfolio in the Downing Street reshuffle under new PM Andy Burnham.
The merger has already been cleared by a raft of other countries, including Australia and New Zealand.
Under the deal terms, Paramount is liable for a penalty of $US600 million for each quarter after September 30 if the merger is not completed by that date.
Paramount beat out Netflix in its bid to take over Warner Bros Discovery. The acquisition will include Warner brands including its film studio, HBO, DC comics, CNN and franchises such Lord of the Rings, Harry Potter and Game of Thrones.
