A federal United States judge has ordered the suspension of the proposed $110 billion merger between Paramount and the Warner brothers. This was the result of a lawsuit filed by the Attorney-General of 12 states, which the prosecution considered would weaken the competition between multiple media and the distribution market.
Court paused for 14 days.
The United States District Judge, Araceli Martínez-Olguín, issued a 14-day stay on Monday. Previously, the Court had heard the parties last week. The State Prosecution Alliance, led by the Attorney General of California, Rob Bonta, can still apply for an extension of the suspension, which means that the transaction may continue to be delayed.
According to the prosecution, the merger would adversely affect cinemas, basic cable distributors and the audience. The litigation documents suggest that if the transaction is completed, competition in the market will be weakened in at least three areas: large-scale court-line distribution, fare-room lead film distribution and basic cable content authorization.
State prosecution focus on antimonopoly effects
According to California Attorney General Bonta, the interim decision of the court was the first progress in the case. The central position of the state prosecution is that further concentration of media resources may reduce opportunities in the industry and reduce the quality of content and services.
The focus of the case is not only on the consolidation of the assets of the two companies per se, but also on whether the United States film and television industry will be further concentrated as a result of the continued consolidation of head-based platforms. Previously, some directors, actors and industry practitioners had also objected to the transaction, arguing that it would reduce market competition.
The deal will integrate video and stream media assets
If the M&A is completed, the transaction will integrate two large video companies and their streaming media platforms into the same system, including Paramount+ and HBO Max. The television network will also be more centralized, with the CBS, MTV and CNN, HBO under the Warner Brothers Explorer in the same group.
Paramount CEO David Ellison said in May this year that the deal was expected to be completed by September. However, this judicial obstruction could disrupt the plans of companies to scale up M & As and to intensify their competition with the elite media giants such as Netflix.
As of TechCrunch, Paramount and the Warner brothers had explored that they had not responded to the request.