The Paramount Warner Bros merger won European approval, but a US lawsuit and court pause have put the $110bn deal on hold.
The Paramount Warner Bros merger has cleared a major hurdle in Europe, but the $110bn takeover is still stalled in the United States. European regulators approved the deal after Paramount Skydance agreed to end its film distribution partnership with Universal Pictures in Europe.
Under the terms set by the European Commission, Paramount must wind down that arrangement within 13 months and cannot start a similar partnership for 10 years. Regulators said they were concerned that sharing distribution with a rival could give the merged company too much influence over cinema releases.
The approval in Europe does not settle the fight in the US. The Department of Justice said in June that it backed the merger, but a coalition of 12 states filed suit last week to block it. The states say the Paramount Warner Bros merger would cause substantial harm to movie theatres, basic cable distributors and audiences across the country. US Judge Araceli Martínez-Olguín then temporarily paused the takeover while those claims are reviewed.
Alon Kapen, a corporate transactional lawyer at Farrell Fritz, said the temporary restraining order is only a brief hold and does not decide the case, but it shows the court sees the states’ theory about the theatrical market as serious. If the deal is not finished by 30 September, Paramount would have to pay Warner Bros shareholders a ticking fee of about $7m a day until closing.
The merger is also facing pushback from the Writers Guild of America, which says it could threaten jobs and wages. WGA head Tom Fontana said the combined company would have tremendous power to suppress wages and cut opportunities for newer writers. Paramount says the merger would help viewers and has promised to release at least 30 movies in cinemas each year, twice its current pace. UK regulators are also reviewing the deal, citing concerns about local news, children's television and streaming competition. For Americans, the key issue is whether this deal reshapes what reaches theaters, cable homes and workers’ paychecks.
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