US states file to pause WBD-Paramount deal

Twelve US states have filed a motion to pause Warner Bros Discovery and Paramount’s merger, just hours after they filed a lawsuit challenging the deal.

The move from the dozen state attorney generals – who are all Democrats – calls onjudges to impose a temporary restraining order and preliminary injunction to block the $111bn combination.

It came after the same group of attorney generals, led by California’s Rob Bonta, asked the two companies not to complete the deal until the judicial process around the original lawsuit could conclude, a request that WBD and Paramount declined.

Reps of Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington are part of the consortium.

Attention now turns to whether the temporary restraining order will be permitted, although Paramount is widely expected to appeal if it is.

Bonta said the “unlawful merger” would harm movie theatres, basic cable distributors and “audiences on every sofa and movie theatre seat in the US.”

He added: “I will not let Warner Bros and Paramount merge without a fight.”

Paramount, meanwhile, has already said it will contest the lawsuit, describing it as “a fundamentally flawed application of the antitrust laws” and “wrong on both the facts and the law.”

The David Ellison-led company said it would “vigorously defend the transaction and demonstrate that this challenge is inconsistent with sound competition policy and the competitive realities of the media marketplace.”

It added that the “dominant streaming and technology platforms” were harming Hollywood, rather than the proposed merger of WBD and Paramount, claiming that a combined entity would “create a stronger, well-capitalised, creative-first media company that is better positioned to compete with companies like Netflix that have come to dominate the industry for audiences, premium content, and creative talent.”

The Dutton Ranch and Top Gun studio also highlighted that the deal had already been approved by the US Department of Justice, as well as regulators around the world. The European Union is expected to give the greenlight in Europe but the UK government has said it is “minded to intervene” in the merger. 

Paramount leadership previously indicated that they expected the transaction to close by 30 September pricing WBD at $31 per share.

Should it take longer to close, a “ticking fee” will kick in whereby Paramount must pay WBD an additional $0.25 per share each quarter until the merger is consummated. If the deal fails to close by March 2027, either party can walk away.