A federal judge in California has paused a pending settlement between Paramount and a number of states in an antitrust cause involving the acquisition of Warner Bros Discovery (WBD), questioning attorneys at a hearing on Thursday about concerns raised by a lawmaker.
U.S. District Judge Araceli Martínez-Olguín has not ruled on whether to approve the proposed consent decree. The judge scheduled a virtual hearing on Thursday to address outstanding questions about the agreement and did not indicate when she would issue a decision, saying a ruling would come in “due course.”
“The court isn’t a rubber stamp of your agreement,” Martínez-Olguín said during the hearing, adding that she wanted to determine whether the settlement was reached through an arm’s-length process and not through collusion.
Paula Blizzard, a senior Assistant Attorney General for the antitrust section of California’s Department of Justice, told the judge the settlement was negotiated at arm’s length. An attorney for Paramount agreed with that characterization.
Martínez-Olguín also asked the parties to respond by 12 p.m. local time Monday (3 p.m. Eastern Time) to a letter written by U.S. Senator Cory Booker, who urged the court to conduct its own probe of the settlement because it was filed without a competitive impact statement, public comment period or formal opportunity for theaters, distributors, workers or consumers to be heard.
Paramount opposed Booker’s filing earlier Thursday, calling it an improper “pseudo-amicus submission” after it already reached a settlement.
Blizzard told the judge the states were cautious about permanently blocking the merger, saying WBD could seek another buyer if the Paramount transaction was stopped. She said the proposed remedies were intended to address alleged competitive harms without permanently changing the structure of the deal through a full block or immediate divestitures.
The settlement would impose strict conditions on Paramount for at least five years, including a restriction that prevents Paramount from leaving the state or otherwise selling its film and TV production lots in Southern California during the period. Paramount must also commit to a certain number of theatrical film releases and set aside a sizable budget to bankroll that operation.
The proposed decree also includes cable-network remedies: If Paramount-WBD violates certain anti-competitive terms, the company could be required to divest several networks, including BET channels, VH1, Comedy Central, Smithsonian, Destination America and Science Channel.
