antitrust trial

Paramount Skydance must wait until March to defend its proposed $111-billion acquisition of Warner Bros. Discovery — a blockbuster deal that would reshape Hollywood by uniting two storied studios.

On Tuesday, U.S. District Judge Araceli Martínez-Olguín scheduled a March 2 trial to decide the merits of an antitrust challenge brought by 12 state attorneys general, led by California Atty. Gen. Rob Bonta. The states are teaming up to try to derail Paramount’s merger, and have snared preliminary victories — prompting a concession from Paramount to put the merger on hold until after the trial.

Paramount had asked for a Nov. 4 trial date.

Tech scion David Ellison wants to add HBO, CNN, HGTV, Food Network and the Warner Bros. studio to his smaller stable of Paramount properties. The trial will span 12 days and conclude March 19, the judge wrote in her order.

“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,” Paramount said in a statement.

The Writers Guild of America has separately sued to block the merger.

Friday marks the one-year anniversary of Ellison’s purchase of Paramount.

“Looking back on the past twelve months, I’m incredibly proud of how our team has turned those priorities into measurable progress, reflecting their talent, hard work, and dedication,” Ellison wrote in a Tuesday letter to shareholders as the company released its second-quarter earnings.

Results were mixed.

Revenue inched up 1% to $6.91 billion compared to the year-ago period, when Paramount was controlled by media heiress Shari Redstone.

The company’s studios and streaming divisions turned in stronger performances but costs, including $153 million in merger-related expenses, weighed on the corporate entity.

Profit declined 28% to $41 million, or 4 cents a share, compared to $57 million in the year-earlier period.

Paramount said it now has 81.6 million streaming customers, an increase of 2 million from the first quarter.

Streaming operations produced $2.5 billion in revenue, a 9% boost from the same quarter a year ago. Paramount+, which boasts the Taylor Sheridan-produced “Landman” and “Dutton Ranch,” also televised President Trump’s birthday extravaganza, the UFC Freedom 250 fights in June from the White House lawn.

Coverage of the FIFA World Cup in some Latin American countries assisted the streaming results. (Fox and Telemundo broadcast the highly rated soccer matches in the U.S.)

Studios revenue increased 16% to $1.3 billion, boosted by Paramount’s television studios and its licensing deals as well as the ability to consolidate revenue from Skydance properties. During the quarter, the Melrose Avenue film studio released “Scary Movie,” which brought in $231 million in global ticket sales, surpassing expectations.

Television media, which includes the CBS network, TV stations and the company’s struggling cable channels, declined 9% to $3.1 billion. Advertising revenue fell 14% and the company felt the loss of South American television operations, Telefe and Chilevision, which it divested after the Ellison takeover.

The company revenue during the current quarter should come in around $7 billion. It also released its full-year guidance, saying it expects $30 billion in revenue, up 4% over 2025.

Paramount released the earnings after markets closed Tuesday. During regular trading, shares gained nearly 2% to close at $8.38.

Paramount Skydance Chief Executive David Ellison isn’t waving a white flag.

After Paramount agreed Friday to delay its proposed merger with Warner Bros. Discovery to battle a stiffer-than-anticipated antitrust challenge from California Atty. Gen. Rob Bonta and 11 other state attorneys general, Ellison is resetting expectations. In a Monday memo to employees, Ellison wrote that he still believes his mammoth merger will be consummated in the coming months.

Paramount stock has lost about 20% of its value since the beginning of July amid concerns that the company will have to shoulder higher costs to get its $111-billion Warner Bros. acquisition across the finish line. Friday’s agreement with the state attorneys general to delay the merger’s close until after an antitrust trial, which will likely be held in 2027, also was unsettling to shareholders and some employees.

Paramount Skydance shares closed at $8.03, down 2.19% Monday afternoon.

“Let me be clear: we remain highly confident that this transaction does not pose any legal issues, and we will complete it and bring these two companies together,” Ellison wrote in the memo shared with media outlets.

Paramount’s internal teams and Warner Bros. have been diligently working to lay the groundwork for the two rival companies to integrate their operations. The rush had been on because Ellison wanted to close the deal this week — or at least by the end of September — to avoid a higher payout to Warner shareholders.

However, Paramount suspended such ambitions on Friday, agreeing to delay the merger until after a trial to litigate the merits of the antitrust case brought by Bonta and the other Democrats. Oregon, Washington, Colorado, Nevada, New Mexico, New Jersey and New York are among the states joining California in the fight.

The Writers Guild of America separately sued this month, alleging the merger would harm writers. Over the weekend, SAG-AFTRA announced that it supports the state attorneys general as they try to beat back the merger.

“Our members have every right to expect that the government will do thorough regulatory oversight when a deal of this magnitude takes place,” SAG-AFTRA President Sean Astin said in a statement.

“The workers in this industry should not have to rely on promises and aspirational statements,” he added. “This isn’t a conversation about shareholder value, it’s about the survival of the entertainment business in America.”

Teamsters already have spoken out against the deal.

Bonta and fellow attorneys general from Democrat-led states have argued the deal would violate the century-old Clayton Antitrust Act in three markets: wide-release theatrical films, potential blockbuster movies and cable television channel concentration.

U.S. District Judge Araceli Martínez-Olguín, who is overseeing the antitrust suit filed by Bonta two weeks ago, wrote in an order last week that the plaintiff states had presented “compelling evidence” that the proposed merger may violate U.S. antitrust law.

California Atty. Gen. Rob Bonta is leading an effort of 12 state attorneys general attempting to block Paramount Skydance’s $111-billion takeover of Warner Bros. Discovery.

(Genaro Molina / Los Angeles Times)

Paramount disputes that. The firm, controlled by the Larry Ellison family, has pointed to regulatory approvals it has already garnered, including from the U.S. Department of Justice, which found its acquisition of Warner Bros. Discovery would not harm competition.

The deal also won clearances from regulators representing 65 jurisdictions, including Australia, China, the European Commission, Germany, France, Spain and Canada. Paramount has pointed to those approvals as proof that the law is on its side.

In his memo, Ellison said delaying the deal until after a trial before Martínez-Olguín made sense.

“We believe this is the right path because the facts and the law are on our side, and a full hearing will demonstrate why the plaintiffs’ arguments should not prevail,” Ellison wrote.