Federal judge halts Paramount’s $111bn Warner Bros. Discovery acquisition
The landmark media merger, which includes HBO, CNN, and streaming platforms, was previously cleared by the US Department of Justice but faces renewed legal scrutiny over competition concerns.
A US federal judge has issued a 14-day injunction pausing Paramount’s proposed $111 billion acquisition of Warner Bros. Discovery, following a lawsuit filed on July 13 by a coalition of 12 state attorneys general. US District Judge Araceli Martínez-Olguín ordered the halt to allow time for legal review, with a hearing scheduled for August 3 to determine whether the freeze will be extended. The deal, which would see Paramount absorb all of Warner Bros. Discovery’s assets including HBO, CNN, and its streaming platforms, had previously received approval from the US Department of Justice in June.
The legal challenge is led by California Attorney General Rob Bonta, with co-plaintiffs from Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington. The lawsuit argues that the merger would stifle competition and harm consumers, particularly movie theatres, cable distributors, and viewers. This action comes despite earlier warnings from US senators Elizabeth Warren, Bernie Sanders, and Richard Blumenthal, who had urged the Justice Department’s Antitrust Division to scrutinise the deal’s potential to grant excessive market power to the combined entity.
Paramount’s bid emerged victorious in a competitive bidding war that began in October when Warner Bros. Discovery explored a sale amid declining cable viewership and significant debt. Netflix initially offered $82.7 billion for the studios and streaming assets, but Paramount persisted with an offer to acquire all assets. After Netflix withdrew from negotiations in late February, citing that matching Paramount’s price was no longer financially attractive, Paramount finalised its $111 billion offer. The transaction involves Paramount assuming approximately $33 billion in Warner Bros. Discovery debt, in addition to its own existing liabilities.
The acquisition is backed by a $54 billion debt commitment from Bank of America, Merrill Lynch, Citi, and Apollo Global Management, alongside $45.7 billion in equity from Larry Ellison, the Oracle chairman and major donor to Donald Trump. Ellison, who runs Paramount, has warned of significant job reductions expected in the near future. The deal also includes a provision for a $2.8 billion breakup fee if Warner Bros. Discovery backs out, and a ticking fee of $0.25 per share to shareholders for each quarter the deal fails to close by December 31, 2026.
Concerns have been raised regarding the political influence of the Ellison family and the editorial independence of the combined news divisions. Larry Ellison’s ownership of CBS News has faced scrutiny over editorial decisions under his leadership, with reports indicating that Trump sought concessions from news divisions critical of him, including a $16 million settlement from CBS, prior to approving the Paramount takeover. Trump has also publicly stated his intentions to bring CNN to heel under new ownership, adding another layer of complexity to the regulatory and public perception landscape surrounding the merger.
