UPDATED, with state AG and WGA response: Paramount is proposing that a federal judge hold a three-day evidentiary hearing later in August as she weighs whether to issue a preliminary injunction that would halt its acquisition of Warner Bros. Discovery as legal proceedings play out.
U.S. District Judge Araceli Martinez-Olguin issued a temporary restraining order on Monday, halting the transaction for two weeks, while she set a hearing for Aug. 3 on a lengthier preliminary injunction. The order was issued in response to an antitrust lawsuit brought by California and 11 other states last week.
In a filing on Wednesday, Paramount’s legal team is seeking essentially a mini-trial, to be held the week of August 17 or August 24. They also said that the company would consent to an extension of the TRO “to cover the period through a decision by the Court.”
Paramount’s lawyers wrote that the state AGs are seeking an “extraordinary and drastic remedy” — a preliminary injunction that would pause the merger for at least eight months — without giving the company “an opportunity for a full and fair hearing.”
They wrote that the judge “has already recognized Defendants’ proof ‘creates disputes regarding the facts’ that need to be resolved to fully analyze the competitive effects of the transaction. … An evidentiary hearing would allow the Court to do so regarding critical factual issues including market definition, real-world competitive dynamics, barriers to expansion, and incentives. Resolving these factual disputes is essential to answering the fundamental question of whether Plaintiffs have carried their burden to prove that the proposed transaction substantially lessens competition. It does not.”
Hanging over all of this is the date of Sept. 30, after which Paramount will owe a $7 million per day “ticking fee” to Warner Bros. Discovery if the deal is not closed by then. Paramount’s legal team, led by Jeffrey Kessler, noted that in their latest brief, writing that a preliminary injunction would
create “commercial uncertainty regarding the transaction and cost Paramount well over $1 billion in ticking fees and other additional costs.”
The judge set a briefing schedule in which the state AGs opening brief due on Thursday, and the company response is due on Monday. The state AG reply is due on July 30. Paramount’s legal team proposed a schedule in which opening briefs would be filed on July 28, the company reply on August 7 and the AG response on August 12.
The state AGs indicated their opposition to the change in schedule, arguing that Paramount now seeks to “upend” it “at the eleventh hour.”
At the hearing on a TRO last week, the attorney for the state AGs, James Weingarten, opposed an earlier Paramount scheduling proposal, which he said was intended to speed up the proceedings. “Having two experts in a food fight in a month will just waste everyone’s time and resources, if it’s even possible,” he said.
The Writers Guild of America filed its own motion for a preliminary injunction as part of is separate lawsuit, and is seeking to align its hearing with the states on August 3. Paramount’s legal team wrote that such a schedule was “not feasible,” but that it would be possible for a later date in August.
In a filing on Thursday, the WGA legal team objected to Paramount’s proposed schedule. They wrote, “Defendants suggest that the Court cannot fairly resolve the PI Motion without a fuller evidentiary record. Not so. No party has taken any discovery in this case. Defendants have not produced a single document or piece of data to Plaintiffs; and Plaintiffs have not deposed a single Defendant witness. Without discovery to support vigorous cross-examination, Plaintiffs would be faced with Defendants’ executives’ self-serving testimony.”
