Paramount’s $110 billion takeover of TNT Sports parent company Warner Bros. Discovery is on hold for at least 14 days following a judge’s order Monday, but the media megadeal could also soon grow far more expensive.
A week after a dozen states sued to block the agreement, Judge Araceli Martínez-Olguín of the U.S. District Court of the Northern District of California granted the plaintiffs’ request for a temporary restraining order. That decision will pause any further progress on the deal by the CBS Sports parent company for a minimum of two weeks, and it also sets up a critical hearing scheduled to begin Aug. 3 on a preliminary injunction that the states seek.
Like many other antitrust cases, that injunction will have massive implications on the entire case, by extension, the merger itself. If the injunction happens, it will almost certainly push any closing past the Sept. 30 date by which Paramount intends to close the WBD deal. Paramount is subject to a $650 million fee for any additional quarter in which the deal doesn’t close. The company, however, had previously intended to complete the deal as soon as this week.
Beyond that, though, antitrust cases that end up with an injunction like this also tend to lead to a dissolution of the entire deal that sparked the legal dispute. As a result, the coming weeks will loom large in whether the Paramount-WBD union will actually happen.
In the TRO order, Martínez-Olguín pointed to a likely concentration in the movie business from a Paramount-WBD combination.
“Here, plaintiffs present compelling evidence that the combined firm resulting from the transaction will possess substantial market share in the wide-release theatrical distribution market,” she wrote. “The balance of equities, combined with the public’s vital interest in antitrust enforcement, therefore tips sharply in favor of the requested injunctive relief.”
While the legal case focuses primarily on the potential Hollywood-related impacts of the deal, and an alleged violation of federal antitrust law, the Paramount-WBD impact also has far-reaching sports impacts. The planned combination of TNT Sports and CBS Sports would have touchpoints in nearly every major pro and college sports entity in the U.S., with the notable exception of the NBA.
“This is a critical first win in our case to ensure this megameter never sees the light of day,” said California attorney general Rob Bonta, who is leading the coalition of states in the case.
The TRO could be extended for up to 28 days.
“We are confident the evidence will demonstrate that the state AG’s antitrust arguments are without merit as their alleged markets and claims of anticompetitive effects are without any basis in modern market realities,” Paramount said in a statement.
