Paramount-Warner Bros. Judge Pauses Deal With Serious Issues

**SPEAKER_1** (0:02)
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This is Bloomberg Businessweek Daily, reporting from the magazine that helps global leaders stay ahead, with insight on the people, companies, and trends shaping today's complex economy, plus global business, finance, and tech news as it happens. The Bloomberg Businessweek Daily podcast with Carol Massar and Tim Stenovec. On Bloomberg Radio.

**Carol Massar** (0:32)
Well, certainly top of mind today, federal judge temporarily paused Paramount Skydance's $110 billion takeover of Warner Bros. Discovery, the judge in Oakland, California ordering the companies to hold off on consummating the deal for 14 days. Paramount Warner Bros. hope to close though, Tim, as soon as July 22nd.

**Tim Stenovec** (0:51)
Yeah, shares dipped initially. Warner Bros. Discovery shares are still lower down 3.8 percent. Paramount Skydance shares, they were down earlier in the session as much as 2 percent, but down now, a little bit higher right now.

**Carol Massar** (1:04)
Just a tad. Yeah. All right. So let's get to it. What do we need to know? Why is this happening now? That's what makes me wonder. Bloomberg News Senior Editor and Entertainment Team Leader Chris Palmeri, usually on the West Coast in the heart of Hollywood out there in LA, joining us here, as we said, in New York City.
What do we know about this and why is this happening now?

**Chris Palmeri** (1:23)
Well, just to put a little context here, they were very close to closing this. Justice Department approved the merger. EU is expected to announce something on Wednesday. They're going to have a deal and green light it.
So Paramount was hoping they could actually close this week. And so the Attorneys General, who had been sort of threatening action finally, it did sue. And so now this is a potential problem because anything past September that Paramount doesn't close, they have to pay Warner Bros. shareholders millions of dollars a day until they get it done, if they get it done.

**Tim Stenovec** (1:58)
If they get it done, are we really saying that?

**Chris Palmeri** (1:59)
Well, I think the market's reaction indicates that something will happen, that some sort of agreement will be reached. I think that might be a face-saving move for the Attorneys General, certainly for Paramount as well.

**Tim Stenovec** (2:11)
What's the sticking point here?

**Chris Palmeri** (2:13)
Well, there's a lot of people, particularly in Hollywood, who really object to this. I mean, we're combining two legendary movie studios, two giant operators of cable TV channels, two news divisions, CBS and CNN, two giant streaming services.
So if this isn't antitrust, what is, right? I mean, this is a major consolidation. Now you get into the question of how much market share do they have. And this is one of the things that I think people reacted, were a little surprised that the suit wasn't stronger. They really decided to focus on the movie business, and they couldn't even really even get a 30% market share for the combined studios. So I think there was a feeling that the case was not as strong as it might have been, and this is kind of like almost a relief for investors.

**Carol Massar** (3:02)
So could any chance Netflix come in at this point, Chris? And would this be a deal that would more likely pass regulatory muster?

**Chris Palmeri** (3:09)
Well, we can go on and on about Netflix right now. They're sort of in a lot of trouble. I mean, their stock really began to head south last year when they initially were interested in Warner Bros. And they haven't really overcome this idea of what were they thinking.
So I can't see them coming back at this point.

**Carol Massar** (3:27)
So this deal does get done. I mean, we know they want to do it as soon as July 22 Is that likely to happen? Or is it just maybe it takes a while?

**Chris Palmeri** (3:33)
Definitely not July 22 So I think the next is a hearing to determine whether the injunction that's just a temporary one now goes at least through the end of trial. Now remember, the attorneys general are asking for a trial date next year. So that's potential trouble for Paramount. And they're going to fight every step of this the way. They're going to fight the injunction. They're going to fight. I think they're making Delrahim, their chief legal officer, suggest it could go to the Supreme Court.

**Tim Stenovec** (3:57)
But I mean, if it goes to the Supreme Court, is there...
I don't know. It's hard to say with this Supreme Court. But is there sort of precedent for something like this? I mean, it's a challenge to actually answer that, given that we're in a different era than we've ever seen with media right now. And if you were describing this 10 years ago, I think there would be huge issues. But it's not like that anymore.