July 20 (Reuters) – A coalition of states led by California won a pause of Paramount‘s PSKY.O $110 billion acquisition of Warner Bros. Discovery WBD.O on Monday, after the states argued letting the merger close would irreparably harm competition.
The order will pause the deal for 14 days, giving the group of states time to argue for the merger to be delayed throughout the course of the lawsuit, which could take months to reach a final ruling.
U.S. District Judge Araceli Martínez-Olguín said she will hold a hearing on that request on August 3.
A spokesperson for Paramount did not immediately respond to a request for comment.
California and 11 states sued on July 13, arguing the deal would create a media behemoth with the power to raise prices in film and television.
If the deal is allowed to close, Paramount would soon begin cutting jobs and sharing sensitive information with Warner Bros., actions that are hard to undo if the merger is ultimately found to be illegal, the states argued.
The lawsuit, filed in Oakland federal court, threatens to derail Paramount CEO David Ellison’s bid to transform his company into a major rival of Netflix NFLX.O and Disney DIS.N.
Paramount has said the lawsuit distorts settled antitrust law, and that delaying the transaction would only harm entertainment workers who have already suffered through years of industry disruption.
A prolonged interruption could hurt Paramount financially. For each calendar day the merger is delayed past September 30, Ellison would be on the hook to pay Warner Bros. shareholders a 25-cent-per-share “ticking fee,” or about $7 million a day, according to the merger agreement.
(Reporting by Jody Godoy in New York and Dawn Chmielewski in Los Angeles; Editing by Andrea Ricci )
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