An industry-shaping merger between Warner Bros. Discovery and Paramount has run into a legal roadblock.
U.S. District Judge Araceli Martinez-Olguin fron North District of California ruled this week to put a two-week restraining order on the merger deal, delaying Paramount’s $110 billion acquisition of Warner Bros. Discovery from closing.
The move gives Judge Martinez-Olguin the opportunity to go over a complaint from California Attorney General Rob Bonta, who, along with 11 other Attorney Generals, alleged the transaction violates antitrust laws and would “extinguish competition” in the entertainment industry.
A hearing will take place on August 3 to decide whether the transaction should be further delayed until the lawsuit is completed. Such a pause could be incredibly detrimental to Paramount-Skydance, which agreed to pay a “ticking fee” to Warner Bros. Discovery shareholders if the deal isn’t finalized by September 30.
A CNBC report explained that, per the merger agreement, they would have to pay an extra 25 cents per WBD share for each three-month quarter the deal gets delayed. Each quarter would be roughly $650 million in extra fees paid as part of the deal.
The legal challenge comes just a month after the U.S. Department of Justice approved the deal, not deeming it a significant threat to competition.
The most recent development is just another twist in a dramatic saga between the two entertainment goliaths. Paramount-Skydance, owned by the Ellison family of Oracle wealth, got into a heated bidding war last year to try and prevent Warner Bros. Discovery from selling assets to Netflix.
A months-long battle between Netflix and Paramount went the way of the Ellisons, who finally earned approval for the transaction by April.
Despite getting past the bidding process and earning the approval of the DOJ, it looks like there are still battles that the Ellison family will have to win before they officially own two of the media industry’s biggest assets.
Warner Bros. Discovery has the exclusive TV rights to AEW’s programming, airing Dynamite and Collision on its TV channels. They also have a minority stake in the wrestling promotion, a CNN report revealed earlier this year.
TKO, which owns WWE, is currently under a seven-year, $7.7 billion deal to present UFC events on Paramount.
