Judge Won't Rubber-Stamp Paramount-Warner Bros. Deal, Orders Answers to Booker Letter by Monday

The $111 billion Paramount-Warner Bros. Discovery merger hit its third straight delay this week when U.S. District Judge Araceli Martínez-Olguín declined, again, to approve the antitrust settlement that would let the deal close.

Thursday's hearing came three days after California Attorney General Rob Bonta announced on September 21 that Paramount had reached a deal with 12 state attorneys general to drop their lawsuit. That agreement was supposed to clear the last legal hurdle. It hasn't.

Instead, Martínez-Olguín spent the hearing pressing lawyers on whether the settlement was actually negotiated at arm's length or rubber-stamped through collusion, according to The Desk. "The court isn't a rubber stamp of your agreement," she said, per The Desk's reporting.

Paula Blizzard, a senior assistant attorney general in California's DOJ antitrust section, told the judge the settlement was negotiated at arm's length. An attorney for Paramount agreed. Josh Holian, Paramount's attorney, told the court the merger was about competing with Netflix, Amazon, and Disney, according to the Los Angeles Times.

The Booker Letter

The judge's biggest ask: both sides now have until noon Monday, September 28, to respond to a letter from Senator Cory Booker (D-N.J.), the top Democrat on the Senate Judiciary Subcommittee on Antitrust. Booker wants the court to run its own independent public-interest review before signing off, arguing the settlement was filed without a competitive impact statement, a public comment period, or any formal chance for theaters, distributors, workers, or consumers to weigh in, per the Los Angeles Times and The Desk.

Antitrust consent decrees involving private lawsuits by state AGs don't automatically carry the same public-comment requirements as DOJ settlements under the Tunney Act. Booker is arguing the court should impose scrutiny anyway given the size and stakes of the deal.

Paramount pushed back hard, calling Booker's letter an improper "pseudo-amicus submission" filed after the settlement was already reached, according to The Desk. Paramount's lawyers have separately argued in filings that the 12 state AGs and the company reached the deal after "extensive and difficult negotiations" between "sophisticated and competent counsel," and that outsiders preferring different terms doesn't make the deal unfair.

Outside Groups Get Their Say Too

Separately, Martínez-Olguín granted motions allowing merger opponents, including the Writers Guild of America and a coalition called Block the Merger, to file amicus briefs, with a deadline of 12:01 a.m. Friday, September 25, according to Breitbart. Free Press co-CEO Jessica González, co-counsel for Block the Merger, argues the attorneys general failed to adequately represent the public interest and that the consent decree is "weak and unenforceable."

The delay runs at minimum to the Monday deadline, not one day, and the judge gave no timeline for a final ruling beyond saying it would come "in due course," per the Los Angeles Times.

The Money Clock

Under the merger contract, Paramount owes Warner Bros. Discovery shareholders roughly $7 million a day if the deal doesn't close by September 30, according to the Epoch Times. Paramount had asked the judge to force the 12 states and the Writers Guild to post a bond of up to $1.88 billion to cover that cost if their objections keep dragging things out, with a hearing on that bond request originally scheduled for Thursday as well.

CEO David Ellison told staff earlier this week he expected the deal to close in about two weeks. That timeline is now in doubt.

What's Actually in the Settlement

The underlying deal, if approved, requires the combined company to release at least 30 films in theaters annually, commit an additional $1.5 billion to domestic film production, and set aside $47.5 million for workers affected by the merger, according to the Los Angeles Times. It also creates a five-person editorial independence board for CBS News and CNN, appointed by Paramount's own board of directors, bars Paramount from selling or closing its Melrose Avenue or Burbank lots for five years, and includes triggers that could force divestiture of networks like BET, VH1, Comedy Central, and Science Channel if Paramount-WBD violates competitive terms, per The Desk.

California's Bonta has argued the settlement will pull in at least $300 million more in annual film production and boost theatrical releases, addressing what theater owners have said is a supply problem, attorney Paula Blizzard told the court. Blizzard also said the states were cautious about seeking a full block of the deal because Warner Bros. Discovery could simply find another buyer if the Paramount transaction collapsed entirely.

The next concrete deadline is noon Monday, September 28, when Paramount and the state attorneys general must respond to Booker's demand for independent review. No ruling date has been set beyond that.