California and 11 other states have sought a temporary restraining order and preliminary injunction to prevent the deal between Paramount and Warner Bros. from closing while the states file an antitrust lawsuit. In a motion filed Monday night, the states asked a federal judge to act by July 22. Paramount previously informed the states that
California and 11 other states have sought a temporary restraining order and preliminary injunction to prevent the deal between Paramount and Warner Bros. from closing while the states file an antitrust lawsuit.
In a motion filed Monday night, the states asked a federal judge to act by July 22. Paramount previously informed the states that it will not close the transaction before that date.
“The transaction will eliminate competition between Paramount and Warner Bros. and will allow the combined entity to increase prices and reduce production,” the motion states. “The plaintiff states have an interest in enforcing antitrust laws and their citizens face the risk of suffering profound and irreversible harm in the absence of a court order.”
The states filed suit that same day, alleging that the $111 billion transaction violates federal antitrust law in three markets: wide-release motion picture distribution, blockbuster movie distribution and basic cable television distribution. The states argued that the deal would hurt consumers, movie theater owners, and cable and satellite companies alike.
Paramount Skydance quickly responded, saying the states had a “fundamentally flawed” understanding of the facts and the law.
“Delaying this transaction will only hurt entertainment workers who have already suffered in recent years as technology has disrupted their livelihoods and cost California tens of thousands of entertainment jobs,” the company said.
To obtain a court order, states will have to persuade a judge that the case has a chance of success and that they will suffer “irreparable harm” in the absence of a court order. The states argue that if the deal is allowed to close (and subsequently declared illegal), it will be impossible to “crack the egg” at that point.
The California attorney general’s office had said Monday that it would seek an injunction if Paramount did not agree to suspend the merger while the case was pending. Unsurprisingly, the company disagreed with that, prompting the filing.
“These industry titans should not move to merge until a court properly evaluates our claims,” Attorney General Rob Bonta said in a statement Monday night. “Today, along with a coalition of attorneys general, I have filed an emergency motion asking the court to immediately stop this merger. I will not allow Warner Bros. and Paramount to merge without a fight.”
The ruling on the court order will be an early test of the strength of the states’ case. In March, a similar coalition managed to obtain an order preventing the Nexstar-Tegna merger from taking effect. That ruling is now on appeal.
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