An emergency takeover bid has been filed to challenge Paramount’s $110 billion mega-deal for Warner Bros. Discovery, the latest legal salvo in a merger that will reshape Hollywood.
Paramount subscribers, in a court document filed Monday, are asking Judge Elena Kagan to issue an order that would block Paramount from closing the deal until their case is reviewed. The merger will be finalized on Tuesday.
Last week, U.S. District Judge Araceli Martinez-Olguin signed a settlement agreed to by Paramount, the states and the Writers Guild of America to resolve the case. She also refused to issue a last-minute temporary restraining order requested by Paramount subscribers. In the first lawsuit challenging the deal, they had alleged that the acquisition would significantly limit competition in streaming, news and theatrical distribution, in violation of antitrust laws.
In the document filed Monday, the subscribers claim that the terms of the interstate agreement “do not preserve competition between Paramount and Warner Bros.”
Under the terms of the agreement, Paramount and Warner Bros. must release at least 30 films theatrically per year for the first two years and 32 for the next three years, maintain a minimum number of wide, independent releases, and ensure that at least half of the films are produced or jointly produced by the combined company. Other notable terms: Keeping basic cable negotiations separate between Paramount and Warner Bros. and creation of an independent five-member board of directors overseeing the editorial standards of CBS News and CNN (selected by Paramount). A violation of the old clause could result in an order requiring the studio to divest from BET, VH1 and Comedy Central, among other channels, although blue-chip assets like CNN or New Line Cinema are not on the table in those divestiture scenarios.
The subscribers claim that Martinez-Olguin wrongly rejected their offer for a temporary restraining order “based on a premise that the record directly contradicts.” They dispute its conclusion that they did not provide sufficient evidence that the merger should be blocked.
“The district court stated that Plaintiffs had once again presented no evidence, were left with allegations, and that future motions for TRO or preliminary injunction submitted without evidence would face summary denial,” Joseph Alioto, the subscribers’ attorney, wrote in the filing. “Yet Plaintiffs had specifically directed the court to Respondents’ declaration, the notarized exhibits, Ellison’s statements, and the consumer verifications. The extraordinary showing begins with this obvious factual error: the evidence the court declared nonexistent was already on its record.”
The filing also says the public interest favors freezing the deal until the Supreme Court reviews the matter.
There is a “good prospect of a reversal,” Alioto writes. “The district court’s stated premise was not that the evidence was weak; but that the plaintiffs offered none. »
Before a settlement was reached, the court granted the states’ proposal to temporarily block Paramount from completing the merger. The decision hinged on Paramount’s planned 27 percent market share in large-scale theatrical distribution. In this regard, the court found that it could “presume that the proposed merger would likely violate antitrust laws” because it could “substantially lessen competition.”
For the 11-hour filing to be successful, the Supreme Court would have to immediately issue an order preventing Paramount from going out of business.
On Tuesday, David Ellison announced the top executives who will help him lead the combined Paramount-Warner Bros. company. Discovery. He will serve as chairman and CEO, while former Mattel chief Ynon Keiz will join him as co-CEO. Casey Bloys will lead Skydance’s streaming business, while Josh Greenstein and Dana Goldberg will oversee the combined company’s film studios. Mark Thompson will continue to operate CNN.
Gn entert
