No ParaBros Decision Today As Judge Delays Settlement Sign-Off; CA AG’s Office Insists Deal “Not The Result Of Collusion”

The much disparaged state Attorneys General negotiated settlement in Paramount‘s $111 billion acquisition of Warner Bros Discovery did not receive the court approval today Rob Bonta and David Ellison had hoped for.

Instead, with briefs expected by midnight Thursday from opponents of the mega-merger and Paramount moving ahead with a $7.5 billon debt raise, Judge Araceli Martinez-Olguin told the assembled attorneys she wanted them to address by September 29 concerns raised against the deal by longtime merger foe Senator Cory Booker (D-NJ) and others.

Stressing “I’ll get you a ruling in due course” (and probably stressing Ellison out as the October 1 $7 million a day ticking fee looms), the U.S. District judge also had some questions today – a lot of questions.

Addressing a screen full of top firm lawyers and state AG officials in the virtual hearing, Judge Martinez-Olguin wanted to know if the settlement and the consent degree actually “addresses the Clayton Act concerns” that were in the July 13 antitrust suit a dozen blue state AGs filed against the merger. With the sharp realpolitiks at play from California Gov. Gavin Newsom and others for a settlement, Judge Araceli Martinez-Olguin also had concerns that the roller coaster deal was “not the result of collusion and was more of an arm’s length process.”

Her blunt words clearly landed hard with her immediate audience (and maybe the over 640 others on the Zoom).

Even before the judge issued her “homework” for the lawyers, the Golden State’s Senior Assistant AG Paula Blizzard argued for the settlement while at the same time dismissing Paramount’s “threats” and “blackmail” to “pull out of California.” However, claiming the states were still prepared to take the whole matter to trial starting March 2, 2027 if the consent degree wasn’t approved, Blizzard also acknowledged the backlash the settlement has received over the past 72 hours since it was unveiled on Monday morning.

“We absolutely recognize that this merger has engendered a large amount of controversy and commentary and feelings and concerns on a whole host of issues,” she said near the end of the nearly one-hour session. “A lot of these are outside antitrust,” Blizzard added. “They reflect the country’s very broad political and philosophical divides, concerns about the state of the news media, people’s relationship to big companies and consolidation and corporate power, and we hear those voices, we listen to those voices, we respect those voices. But at the end of the day, this is an antitrust case, and it is focused on the antitrust law.”

Insisted the deal was “presumptively valid,” Blizzard told Judge Martinez-Olguin it was the result of a final surge of talks over “tens of hours, in-person video conferences, phone conferences, drafts-all the normal things you would see in a consent decree, except magnified because you had 12 attorneys general on our side.”

Paramount outside counsel Josh Holiann disputed the use of the term ” blackmail” when it came to timed leaks the Ellisons were serious about pulling up Melrose lot stakes, jobs and productions to redder jurisdictions (“It was a business decision …Paramount had to make.”), the attorney promised the judge the penalties in the settlement would now “keep our feet to the fire.”

Still, With Holian, Beth Wilkinson, Jeffrey Kessler, Daniel Petrocelli, and other Para lawyers on-screen (s0me clearly working on something else), it was mainly CA Assistant AG Blizzard who took point trying to sell Judge Martinez-Olguin on the deal — and it sure seemed like a hard sell.

“We believe we have five years of remedies that will remove the competitive concerns we see the harms we see and preserve competition,” AAG Blizzard stated. With nodded agreement from Paramount attorneys, Blizzard stressed the divestment of some cable channels if necessary and Miramax and other clauses in the settlement is “the best solution” other than blocking “it completely?”

Sounding very much like she was arguing for Paramount, Blizzard ventured into some hard Hollywood realities to give the deal context. “Obviously, in this case, Warner Brothers originally said it was going to sell its assets,” Blizzard said. “So, if we block this merger, there will probably be another one, perhaps before Your Honor, in a year or so, and is that the best solution for the markets to preserve the competition that the Clayton Act requested.”

Kneecapped to some extent by Zoom wide technical glitches that initially prevented some of the attorneys and state government officials from participating in the virtual hearing, the hearing on the now delayed settlement sign-off was delayed itself by nearly 15 minutes.

Now, with that ticking fee clock ticking, ParaBros closure is also once again delayed — at least until Monday at noon. Well played Senator Booker.