UPDATED, with Paramount comment: A federal judge has set the Paramount-Warner Bros. Discovery merger trial for next March.
The date is much closer to the timeline sought by state attorneys general and the Writers Guild America, who sued to block the transaction, rather than a trial start this fall favored by Paramount.
U.S. District Judge Araceli Martínez-Olguín, based in Oakland, wrote that the trial will take place from March 2 to March 19 of next year.
Paramount had sought a November trial start; the state AGs and the WGA proposed April.
The judge wrote that the trial will run from 8:30 a.m. to 1:30 p.m., with two 15 minute breaks. The trial will be dark on March 8 and March 15.
A Paramount spokesperson said in a statement, “We respect the court’s decision and continue to believe a trial on the merits is the best and most direct way for us to prove what we’ve said from the start – this transaction is lawful, pro-competitive, and raises no antitrust concerns. The lawsuit against us has no basis in fact, economics or antitrust law. We will continue to vigorously defend the transaction and remain committed to closing as soon as possible so its benefits for the creative community and consumers can be realized.”
California Attorney General Rob Bonta, who is leading 11 other state AGs in challenging the merger, did not comment.
The date of the trial is hugely important for Paramount, which will be on the hook to pay Warner Bros. Discovery $7 million for every day that the transaction doesn’t close after September 30. That was Paramount’s deal sweetener as it competed with Netflix for the legacy studio and other assets.
The merger itself has an expiration date of June 4 of next year, and Paramount agreed to a $7 billion termination fee if the transaction did not close due to regulatory issues. The judge has not given any timeline as to when she would make a decision after the trial.
A month ago, it looked as if Paramount may be on its way to closing the transaction this summer, as it racked up regulatory approvals around the world. But Bonta and the other states filed an antirust lawsuit to block the transaction on July 13 and then won a temporary restraining order to put the merger close on hold for at least four weeks. Paramount then moved to go directly to trial, arguing for the earlier date, albeit even a November trial would cost them tens of millions in ticking fees.
Among other things, in a filing last week, Paramount warned that a trial next spring would require them to refile merger materials with the Justice Department, which has already cleared the transaction, because a waiting period expires on Feb. 19.
“A trial after that date would require the parties to re-do regulatory work that has already been completed,” the company’s legal team said in its filing last week. “This burden is not limited to the United States but will also be applicable in other jurisdictions where pre-closing regulatory review and clearance has been obtained. Redoing work that has already been done to the satisfaction of government agencies around the world serves nobody’s interests.”
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The state AGs and the WGA, however, wrote that they needed extensive discovery. They pointed to the collection of materials on “the definition of the relevant product and geographic markets, the nature and scope of harm in those markets, whether expansion by other firms will prevent harm in those markets, and whether the merger will produce verifiable, merger-specific efficiencies sufficient to outweigh harm in those markets.”
The company said that that the later date would leave the creative community in a period of uncertainty, as Paramount plans to boost production to 30 films per year.
The judge set an initial case management conference for Aug. 19, with a joint case management statement due on Aug. 13.
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