Paramount Faces Drawn-Out Battle With State AGs

Only a few days ago, the states’ antitrust challenge to the Paramount-Warner Bros. merger still looked like a speed bump.

Now, it looks more like siege warfare — as Paramount has agreed to put the $111 million deal on hold for at least several months. In doing so, Paramount’s lawyers have effectively conceded that they were not likely to prevail in an upcoming fight over an injunction and will instead try to beat the states at trial.

“I think they saw the writing on the wall,” California Attorney General Rob Bonta told Variety on Friday. “They saw that the outcome of a motion for a preliminary injunction was a fait accompli. The die was cast. They were going to lose. Otherwise, why not challenge it?”

David Ellison, Paramount Skydance‘s chairman and CEO, had hoped to win a ruling denying the injunction by mid-September — allowing him to close the deal in time to avoid paying Warner Bros. shareholders millions of dollars a day. His lawyers pushed for a three-day evidentiary hearing in late August, where they could confront the states’ expert economist and undermine the states’ argument that the deal will result in illegal market concentration.

But in a ruling on Thursday, Judge Araceli Martinez-Olguin denied Paramount’s bid to speed up briefing on that request, signaling she was not inclined to go along with the multiday hearing. The judge had already granted a 28-day restraining order, finding that the states had made a “strong showing” that the merger was likely to harm competition, and the standard to get an injunction would be similar.

Paramount could have opted to wait for the ruling and then immediately appeal to the 9th Circuit. But Nexstar tried to do that after its merger with Tegna was enjoined in April — and is still stuck in limbo with no assurance of resolution anytime soon. Paramount would have faced a similar delay, likely pushing any appellate relief into early 2027.

So where does it go from here?

To trial, where Paramount still believes it has the upper hand against what it terms “one of the weakest merger challenges in modern antitrust history.” The company hopes to get there as soon as possible, ideally before the end of 2026.

Whenever a trial is held, it won’t come fast enough to avoid having to pay Warner Bros. Discovery shareholders $7 million per day, starting on Sept. 30. But that is a cost that Paramount will have to bear to get the deal done.

The 12-state coalition will push for a later date, arguing that it needs additional time to prepare.

“We do think 2027 is appropriate,” Bonta said. “If the judge said April 2027, we would not disagree with that.”

Paramount has agreed not to close the transaction until five days after the trial ruling or June 1, 2027, whichever comes first. Bonta argued that Paramount is pushing for a speedy resolution due to “business factors” and not due process considerations.

“I’m sure they want a fast trial,” he said. “That’s based on other reasons, not what’s appropriate for a case of this magnitude.”

The states will want extra time to obtain extensive discovery, including documents and depositions they were unable to get during their investigation.

“Paramount and Warner Bros. were dragging their feet. They didn’t give us everything we wanted,” Bonta said. “If they wanted to have a trial quicker, they could have given us the information we asked for in the pre-litigation discovery process.”

The trial will be held in Martinez-Olguin’s courtroom in Oakland, Calif., and could last two to three weeks or more.

In the meantime, Paramount could seek to reopen settlement talks with the states. So far, Bonta said, the company has not offered the sort of structural remedies — that is, divestitures of cable or film distribution assets — that would have to be part of a deal.

Bonta has said repeatedly that he is not interested in “behavioral” remedies, such as a consent decree guaranteeing a minimum number of film releases or 45-day theatrical windows, saying that those have proven ineffective in the past.

“We’ve never gotten anything that would come close to addressing the concerns we’ve raised,” Bonta said. “We’re focused on litigation. We’ve built momentum and we look forward to taking that momentum into trial.”

In its statement, Paramount argued that the strategic retreat was the best way to get to a decision on the merits of the deal as soon as possible.

“This is the fastest and clearest way to prove that this transaction is good for competition, good for consumers, and good for creators, a conclusion dozens of competition authorities around the world have already reached,” the company said.

Bonta argued the opposite — and now it’s clear those arguments present more than a minor obstacle.

“This merger, if it is able to go through, will hurt Americans, will hurt Californians,” he said. “It will raise their prices. It shouldn’t break the bank to enjoy your favorite show on the couch.”