A sigh of relief resonates in Hollywood at noon on Friday. Entertainment giant Paramount, with $111 billion on the table to buy one of its main competitors, Warner, has decided to pause the merger for almost a year, at most, until June 2027. In that time, they hope, a judicial decision will be made about its future. Once that decision is made, in these months, they would restart the merger.
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This pause, which is expected to be long, comes after the blocking of the business union, a decision made last Monday by an Oakland judge (near San Francisco), Araceli Martínez-Olguín. The magistrate demanded a halt to the process for two weeks to analyze the status of the agreement and see if it would proceed or if she would stop it completely. However, this Friday, legal documents accessed by The New York Times show that Paramount itself has now decided to freeze the merger while judges deliberate. Furthermore, although Brussels has given the green light to the union, 12 Democratic states in the United States have also sued to prevent it from going ahead.
Judge Martínez-Olguín argued earlier in the week that everything pointed to an overly large union: “The proposed merger is likely to violate antitrust laws,” she stated in her brief.
In addition, 10 days ago, a dozen Democratic-leaning states, led by California (home to both companies and which would be severely affected by the merger), also filed an antitrust lawsuit against said financial, but also cultural and social, operation. Last July 13, in addition to California, the Democratic states of New York, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, Oregon, and Washington also joined a lawsuit filed in San Francisco by California Attorney General Rob Bonta. In it, Bonta stated that this proposed merger, which he described as “the largest in Hollywood history,” would end “competition between Paramount and Warner Bros and cause considerable harm to movie theaters, basic cable television distributors, and ultimately, the public across the country.”
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Precisely this week, the European Union gave the green light to the merger of the two film and television giants, albeit in exchange for a series of business tolls. Among the obligations imposed by Brussels is that Paramount must end, over the next year, its partnership with United International Pictures, which is another major American film studio, as well as not joining Universal, another of those studios, when distributing films. It would be prohibited for the next 10 years in the so-called European Economic Area (EEA), which includes the 27 partners of the European Union along with Norway, Liechtenstein, and Iceland.
The purchase of Warner is one of the most important operations of the moment in the United States. Netflix also bet on buying the company, but its offer, of $83 billion, fell through when Paramount put up $111 billion. Warner shareholders —who also own HBO, from which films like Barbie, Dune, or Wuthering Heights, among the most recent successes, or classics like Casablanca and Rebel Without a Cause, have emerged— approved the purchase, but for now they will have to wait a little longer, something the industry appreciates, at a time when filming in Los Angeles is becoming less frequent and work is scarce.
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[Developing story. Further details to follow.]