>> The standard also asks are we likely to suffer irreparable harm in the judge answer that yes and our favorite already so I think we're in a good starting place I'd rather be asked them them as we go into the preliminary junction hearing. >> Welcome to this emergency episode of ankle agenda I'm Elaine low of series business here with the ankle himself Richard Rushfield hello. >> And Sean McNulty of the wake up emergency. >> So today we're talking about the temporary restraining order that a judge has issued against the 111 billion dollar merger between Paramount Skydance and Warner Brothers Discovery. This is in response to a loss you brought last week by California and 11 other states on antitrust concerns. Now Paramount has aimed to close this deal by September 30th so this presents a major hurdle to that deal closing we're going to talk about what this means and California attorney general Rob Bonta will join us later in the show to lay out what happens next what concessions Paramount Skydance could offer to make him reconsider this merger and what would happen over the course of a preliminary injunction if it gets issued. Richard I know you can't stay with us for too long want to know what's your quick take here. >> So it's interesting I you know I two week restraining order and itself is not you know it kind of what you would have expected when they first filed it that the judge would say okay I need a couple weeks to look is over so it's not the end of the world or doesn't say doesn't mean that much what way or the other. It implies that the judge may be open to ruling against Paramount that you would have that there are certain judges that you would expect would just say yeah yeah yeah well we're not going to hold this company up so give them what they want and shut your apps and that the judge will be at least open to hearing other things there's I'm seeing online as we go to press there's a footnote that some people are finding very significant that that they said the they say and so we're really reading through the tea leaves when we're at the foot level but it says the court the court notes separately that it cannot accept defendants arguments that the transaction will produce efficiencies that in the streaming market courts have expressly expressly and repeatedly rejected the defense that a challenge murder role result in economic efficiencies and slurred competition the relevant market what that is saying is you can't say okay well we're going to we're going to be losing some in movies or we're going to be losing some of this but we gain competition because there'll be more streaming business or something that each market is its own that is its own thing and has to answer to how this affects the competitiveness of that market so people seem to find that significant so I would say these significance of this is that it is showing a willingness to to look at that. Bonta had said today in a statement that quote this is a critical first win in our case to ensure this mega merger never sees the light of day now they brought this suit on antitrust concerns because when you combine these two companies paramount and Warner Brothers you're reducing five major film studios to four and you're bringing together whole host of basic cable networks and the premise of the suit is that this would weaken the negotiating power of theaters and those basic cables Sean outline for those of us who don't follow the legal proceedings as closely as as we do here at the angler of why this matters on such a large scale this is a town that's seen so many mergers over the last eight or nine years you'll get Disney Fox you look at all the iterations Warner says been through but this particular roadblock what's the significance well I mean it's it is the initial just it could be a speed bump or it could be you know a brick wall you know I mean as Richard said we won't know this until the next hearing is August 3rd so that's you know 14 days from today so at that point the judge can either also instill another 14 day period or can judge on the preliminary injunction which I guess would actually be the real not a speed bump that would you know essentially be like you're slam in the brakes on this this could go to court and probably would go to you know to a court to a trial so respiratory points out this is you know like this is that smooth sailing so far the DOJ had nothing on this the FCC's had nothing this is the first time in this whole proceeding that the American legislative or judicial system has actually said something against this deal now to which is pointed is temporary the judge can go back in two weeks and be like you know what I don't I look at all the information I don't see much that really merits preliminary injunction and at that point you know it's a lot harder from this the states to make their case so that's kind of what this significant is significance is but Richard I do want to you know the the footnote you mentioned so this you know laying mentioned there's two aspects to this movie theater side of it which is putting undue power over the movie theater owners you know we should negotiate terms things like that and then the cable bundle and power of paramounts argument was that well you have to also include Netflix and TikTok and all this stuff and you think about viewing and that note Richard pointed out was like now that's not how streaming is streaming cable TVs its own ecosystem and your networks you exert or would exert a large amount of you know leverage or too much leverage over your business partners being Comcast Charter you know YouTube TV and so forth so that's what that important it Richard that I know it's a footnote Richard you mentioned but it actually puts one of paramounts bigger arguments potentially to the side there Richard yeah I mean that was always a species ridiculous argument and I mean look you know that looks at the same thing when they were going through their process Richard you know broadly speaking way back went to that YouTube is in a completely different business and the fact that like oh they got eyeballs just like we got eyeballs like right you know so does so does you know Albertsons and program markets and TV streams every stuff yeah exactly yeah I mean listen it's hopeful it's like so there's there's two things that as someone who would like to stop the the big trend here is this is part of the overall drive towards consolidation in the industry which has been underway for 30 years and we're entering the probably the the final act of the third act of that of that drama well let's talk about what comes next in this chess match between you know the states now and paramount skydance so there's this TRO and during this 14 day period the plaintiffs are going to file for preliminary injunction yeah the preliminary injunction is you know that's what's where it's at you know that's going to be the the major factor here at the states get that they can pursue it but there's really they could the deal can progress there's nothing of the injunction says you cannot close this deal if that for the injunction is not issued then they are welcome to close that deal by that deadline you mentioned Elaine and then you know Richard you mentioned the timelines though it's probably back a little bit so this deal was you know essentially cleaving declared that was one and say late February maybe early March I forget the exact timeline there so we're talking then of September's a six month time period when paramount when skydance bought paramount that took a year before that deal was official that was announced in I think it was June of 2024 and it closed you know or late the somewhere in July or early August 2025 and that again Richard that took place in a different the bottom administrations when that deal started and then it finished and that deal didn't really have a material pushback is my number of no competitive questions with that right there all this stuff was in yeah exactly you know it was a transfer of a broadcast license the CBS was involved etc but you know so that took a year this is a very accelerated you know timeline here to be essentially six months door to door from when we got this company and announced the deal to expecting like yep we're good and all these factors as Richard mentions you know movie studios you have cable networks you know it's much more multifaceted than what skydance and paramount much was a production company essentially buying a movie studio Richard and essentially issuing this ticking fee right which is a self-imposed deadline that paramount has put on itself by saying hey we think we can close this by September 30th and if we don't we're putting our money where our mouths are and that shows a lot of confidence in their you know view of how quickly the deal could close that they think it could have closed in in six months here so you know I think this is also an interesting inflection point in that like you were saying earlier Sean this largely had been seen as just sailing through and there was a sort of Thanos-like air of inevitability right to the whole deal when you would talk to folks around town and what was primarily a prior a very vocal seeming you know group small group of people has really grown to become I mean Richard what seems to me like a real chorus of people around town saying like yeah this deal isn't good for the business yeah that's the thing that's really changed I mean we'll see if it matters at all but back when it first started I mean you had Jane Fonda and Mark Ruffalo speaking out and that was it like you could not get anyone to give a cold for an article you could not get someone to say anything on background every time I wrote about it all I heard was was this is a done deal why are you wasting time it's stupid to try to oppose this and that was all premised on like they've got Trump so what can we do so
So you're, you're, you're, you're, you're, you're, they get to have this because, and just accepting that without even making a squawk of protest. But there was really no, that there were months there when there was really no one would make a peep about the unions. Weren't the, the guilds took a really long time to, to, to step up and say anything about it, months, many months before they made a peep about this. Well, let's wrap by talking quickly about what this does to Paramount Skydance's reputation in town. You know, you mentioned Richard, they're not particularly popular right now for their political affiliations. And they're not popular on an economic level for the potential for thousands of more layoffs once, you know, if this merger winds up closing. And this is a town that's already seen thousands and thousands of layoffs over the last few years. So, you know, what, what, what do we think this does to Paramount as a place with which to do business? Unfortunately, I think that I'm part of the problem of consolidation. I, I put it to an agent who has projects going out and the, and I said, well, people are going to refuse to do projects. He's like, you know, in theory, if you have three people bidding on, on your project, maybe you'd lean towards the other two. In fact, that never actually happens that you have three people bidding on your project. So, if chances are you're lucky to have one person that wants to do a project. And if that one person is Paramount and you're, I, I've yet, I haven't seen two. I think, well, didn't we have a, when Damon Lindelof refused to do it, but that remains the, the lone example. And I, but I would, I would like to say, say, we're having a bigger impact, but, but, but I'll believe that when I see it. What about you, Sean? Any, any last takeaways here? Well, I just want to go on the point where it's the state A.G.s leading this. I think back to that, Richard, you mentioned that moment of kind of getting consigned to it. What are you going to do? The DOJs in the bag and, you know, we're seeing this. Internally, that was the main opposition point for any large deal on, I'm not just the entertainment, you know, any industry and, you know, what's the, again, the WBD AT&T deal, that was from the DOJ, that was not from the states, you know. And now what we're seeing, and this isn't, and then we have the, the next star, Teggedeal, a combination of two major TV station owner groups also being challenged on the state level. And that succeeded that, you know, that, there's a trial set for next summer on that to pause that deal. We'll see again, if it's successful. But the resistance against this, there's just another lever that's out there. I mean, it's like, oh, it's federal or bust. And we're seeing the states, you know, again, there's Richard's point. It's a 14 day temporary restraining order. We will see if this, you know, in 14 days, this deal could be wave-throat entirely possible. But if this does indeed go to that next stage, the states as a opposition force, you know, against deal-making under certain regimes in this country is showing it has real teeth. I think that's something to be heartened by. And just that things aren't just, you know, the rubber, the Trump rubber stamp, you know, it's in, it's in full proof. It doesn't, you know, doesn't go everywhere. And states have some real power. And that's what we've seen here. We will see if it results in a, you know, a meaningful outcome or not, Richard. But you know what? I just like to add as a post-crip, you know, whatever happens with this deal, we, we have a very small number of movie studios and Paramount is one of them. And anyone who cares about this industry has to root for all of them to succeed. So we need, we need Paramount. We don't need to have another studio folded into it. But we root for the success of all our remaining studios because if, if any, that's why we're against this. Because if any one of them goes the entire system here, we can start to become untenable. So, so let's remember, let's remember that and to our friends at Paramount there who are, who are, keep making great entertainment and movies, you know, we wish all the best for them. Thanks so much to Sean McNulty and Richard Rushfield. After the break, we'll talk to California Attorney General Rob Bonta about what to expect from the coming courtroom proceedings. Now I'm here with California Attorney General Rob Bonta. Thank you so much for joining us. Now that the temporary restraining order has been granted, what comes next? Walk us through the timeline. Sure, a big moment in the case, just don't want to blow by it. But the, you know, getting the temporary restraining order means that the judge found that we are likely to succeed on the merits of this case, the ultimate merits of this case. And found that if we don't get a restraining order issued immediately and to preserve the status quo, we're likely to suffer a reputable harm in the form of an anti-competitive market that hurts competition and hurts consumers. So a really important decision today, we argued this case, this motion on Friday, and then we got the order today. And so we're grateful. Next is a preliminary injunction motion in hearing. The the judge set forth a briefing schedule with a hearing exactly two weeks from today on Monday, August 3rd, where she will hear arguments on the preliminary injunction. A preliminary injunction should we secure it is a order that lasts longer than the temporary restraining order. The temporary restraining order will last about two weeks or so until the judge rules on the preliminary injunction. And then that preliminary injunction will last throughout the dependency of the litigation. If we get it preserving the status quo, blocking the merger so that no steps can be taken by paramount or one or others through the dependency of the litigation until the final judgment is issued in the case to merge. They will not be able to take any steps towards the merger. So that's what we're hoping. This is a we're gratified by today's ruling. It's a really important first step in helping us achieve our goal here, which is to make sure that this merger never sees the light of day. And explain to us briefly what happens over the course of a PI. My understanding is this is pretty much the whole ballgame now. This is where you hear from economists and efficiency experts. Yeah, there's more evidence and so there's the evidentiary part of it is more robust than the temporary restraining order. We set forth very clearly and cleanly, I think precisely and powerfully. Our case showing that in three separate markets, this proposed merger has an illegal impact that violates federal antitrust law. The judge appropriately identified and acknowledged that the law only requires there to be an illegal impact in one market. And she only looked at one market in her temporary restraining order and found that we made a compelling case and we were able to meet the standard of the temporary restraining order and be granted a temporary restraining order. So there could be we've got more evidence and more argument from the I have defendants here, Paramount and Warner Brothers. They might make some arguments about what the appropriate markets are or they might try to poke holes in the markets that we've identified. Ars are very clear. They're very discernible appropriately recognized markets in the why to release theatrical film distribution market, top grossing or blackbuster theatrical release market and as well as the licensing of cable channels to cable companies. And they want to talk a lot about the streaming market, which is not part of our case and the judge actually bats away and swats away that argument in footnote five of the of the 10 page order that we got today saying is that it's not appropriate to be talking about a market that is not the subject of the case brought by the plaintiffs. And so you'll see more argument, more evidence, a more robust evidentiary presentation perhaps by both parties, but it's still on a tight timeframe. This will all be briefed and argued and within two weeks. And have you heard from any other states? Now this was a suit filed by 12 states, California and 11 others including New York and New Mexico and Arizona. Has there been interest from other states upon the issuing of this TRO? Is that something where do other states have the ability to then join the preliminary injunction? How does that work? They do. And right after we announced when we filed our complaint last week, last Monday, we got some interest from additional states. And the granting of the temporary restraining order might encourage an elicity even more interest from other states. We'll see. We're always of course open to those who want to collaborate and fight alongside us on this important legal issue. It's a mean of potatoes and antitrust case. It affects every state and the consumers across this country and in every state. So I think it's not inappropriate for other states to want to join. But it's up to them. I can't decide that for them. But if there's interest and there has been increased interest since we filed, we of course be open to those overshures. And if there's additional interest after the granting of the temporary restraining order today, same. And how unique is the set of circumstances around this particular merger? Are there any meaningful parallels to previous antitrust suits the state has pursued or is this uncharted territory in any way? The comp that I typically hear most is the block deal between Penguin Random House and Simon and Schuster. I think everyone has their own comparisons. I like to remind people about Fox Disney. It was, you know, that's another studio merger. It's a good reminder that this market at least for studios is already concentrated because there's already been mergers in this market. So this is a proposal for a merger in an industry.
market concentration in an already concentrated market. And people try to suggest what will happen if there's this consolidation between Paramount and Warner Bros. and I think history tells us generally what will happen, prices will go up, jobs will get cut, jaw wages will go down, choice competition quality will all go down. Fox Disney tells us specifically what will happen. And I think they reduce their output of movies, at least on the Fox side by half. So they made only half as many movies. And so we think that that's going to happen here as well, that there'll be less films being made, there'll be less TV series being made, less content, less variety of content, less volume of content, less quality of content. And Disney Fox is a good comparison because it's more on all fours, if you will, as a as a comparison and kind of can help us understand the impacts of such emergence of two studios. And these are of course, highly diversified companies, they're not just studios, they have they have streaming, they have basic cable TV, they have premium cable TV, they have a TV studio, they have film studios. So they're highly diversified, but I think Fox Disney is a good comparison. And there are so many of our listeners and viewers who have been impacted by these mergers over the last decade. How much has public perception and pressure played into the way this is all playing out? There's been growing opposition to the deal from the entertainment community this year. I'll say not at all. Like the public perception, public pressure does not impact how we see this case. I mean, we haven't received any, I don't know, public pressure. If you are, I think we don't receive it as as necessary pressure, we did receive a not thinly available threat from paramount that before we filed a which I took as a last ditch desperate effort to try to blackmail me and my fellow AGs into allowing any legal deal to go through when they threaten to leave California. If we dare to enforce the existing law and hold them accountable for violating the law and bring this case, but that's not pressure. This is just a straight up meeting potatoes antitrust case where our complaint is very powerful and potent in its simplicity. Just laying out the three markets talking about the market concentration that will result from this proposed merger showing that those market concentration is presumptively illegal and that the antitrust law requires that the merger be blocked pretty simple, pretty straight up. There might be some other efforts by others to try to talk about this in the court of public opinion. But this is a case that belongs in the court of law. That's where it is. We're talking about to the public about what it means to bring this case in the court of law. What an antitrust case is and how it makes your life more affordable and makes sure that you have higher quality and more variety and more affordable prices. But we just see this as a straight up, down the middle, meet potatoes, antitrust case, and we feel it's very compelling and very strong. And thankfully, the judge, at least in this first decision, agreed with us. And speaking of the reports that Paramount or David Ellison had been advised to consider moving headquarters out of California, would that have affected this suit at all? No, this is 12 AGs from across the country bringing this lawsuit. If they are in any state in this country, the lawsuit remains. We've defined the geographic market as the United States of America. And obviously, all 50 states are in the United States of America. So whatever state they're in, this case still exists exactly the way it is. Let's go back to the timeline for a moment. Now, what's the likelihood that if we are in, there is a preliminary injunction that that will then bump up against the September 30th deadline that Paramount essentially set for itself before a ticking fee sets in? I have an answer to that. That's not something that we are really considering. But now that you're asking it, I'm just trying to think about how long this case will take to get to a final judgment. And if you have, if we are able to secure it, I hope we can. And I believe we will. If we are able to secure a preliminary injunction, it will exist blocking the merger throughout the dependency of the litigation. So will this litigation that we filed in July go past September? I don't see how we get the whole case resolved before September. But so probably if we get a preliminary injunction, that injunction will be in place when the fees or whatever you want to call it, the agreement that Paramount voluntarily decided to agree to, the terms they decided to agree to when those kick in. And I've said this before, because it keeps getting raised, I feel like should raise it again, which is that it was their decision to agree to whatever it is, ultimately in dollars a day, ticking fees to pay. They didn't have to. They're sophisticated. They agreed to do that with Warner Brothers, the people of California, the people of the United States, they don't agree to that. Taxpayers of California, the taxpayers of the United States, they don't agree to that. So I think there was some suggestion that that fee that they unilaterally and independently and voluntarily agreed to somehow would be the burden and obligation of taxpayers to pay. And I just don't see how that makes any sense or how that's true. But just based on how long litigation normally takes, if we get a preliminary injunction, I think the litigation would continue past September before it gets finally resolved in a final judgment. And what's the game plan if the preliminary injunction is denied on August 3rd? We don't expect that. But we just have to assess where we are, we the judges order. She see what she says about the case that we presented, the case that Paramount Warner Brothers presented, but I'm very hopeful that we will not be in that scenario and that we will be looking at a grant of a preliminary injunction. I will say they're, while they're different, a temporary restraining order and a preliminary injunction, mostly in the length of the duration of the order. The preliminary injunction is much longer than the temporary restraining order. The standards are very much very similar. They both ask if the plaintiffs, us, the states are likely to succeed on the merits of this case. The judge already answered that in our favor by looking at one market and didn't even look at the other two markets, which are even more compelling in my humble opinion. And then the standard also asks, are we likely to suffer irreparable harm in the judge answer that yes, in our favor already? So I think we're in a good starting place. I'd rather be asked than them, as we go into the preliminary injunction hearing and the judge makes a decision, but of course we will never count any chickens before their hats. We will always make the best case that we can and we plan to do that for the preliminary injunction. And now the Raiders Guild of America filed a lawsuit a day after yours. Have you been in touch with any members of the WGA's legal team on their lawsuit, which is also on the grounds of antitrust concerns? Do you have any thoughts on the strength of their suit? Yeah, we're aware that they brought the case and it's welcomed. Anyone who has a concern about this case and a legal and factual basis to bring it should bring it. And we're grateful that the Raiders Guild of America did and where our cases are different, but there are also some similarities, there's some overlap. I think they're going to be talking more, of course, about the impact on the labor market and on their members, on writers, on creators. And I think that's a very appropriate thing to do. I'll just say that in our next star, Tegna Case, a separate antitrust case that we brought where we have secured a preliminary injunction blocking that merger during the dependency of litigation. That's the two major broadcast TV companies. Direct TV is a private party who brought a lawsuit in that case too. And they believe that they'd be harmed by that proposed merger and that the law allows them to sue and they've sued. And so the same is true of the Raiders Guild. If they think that they're going to be harmed by this merger, they should bring a suit and and they have and where I'm gratified that they have because I think that's an important step to justice here. And I just want to give a shorter answer to my longer answer about your prior question regarding what we do if we lost the preliminary injunction motion. We would continue the case, of course. The case continues and we would continue to advance our case. And let's talk about the big question that everybody has, which is what could paramount skydance do here to make you reconsider this merger? You recently told CNN that you're not interested in behavioral remedies, which in competition law refers to a company changing certain business practices. You said that you would consider a settlement offer that includes structural remedies, which in this case means typically divesting assets. So, what would be an outcome that would allow this merger to continue in your eyes? Honestly, I'm not really thinking about that. We're in litigation mode now. We brought a lawsuit last week. We followed for temporary restraining order. We had the hearing on Friday. We got the order. Granteeing our temporary restraining order today, saying we're likely to win this case when it's all said and done, saying that if this merger goes through, you will suffer a reputable harm. We like where we are. We want to block the merger. So, if they want to say we're not going to the structural remedy that we're offering is we will not merge paramount and Warner Brothers. We would very much like to ask you to ask if you have
seriously consider that and be interested in that. Anything else we're not really thinking about? We're in litigation mode. We're bringing this case in the very first critical stage, this first order. We got an order very strongly in our favor. We love the judge's order. I think she got it you know right on point and find it finding in our favor for all the reasons that she said fourth. I'll also point out that she went mentioned in a footnote there, footnote five of the order. She batted away and swatted away one of the arguments that is a centerpiece of the defense of Paramount Warner Brothers. They're argument that this merger will help them be more competitive in the streaming market. That'll help them compete with Netflix and Amazon and Apple and she says in a footnote that that is an inappropriate argument to make that you cannot talk about pro-competitive arguments that you have for a separate market than the markets that are actually relevant here, the markets that are in the complaint brought by the 12 states, the plaintiffs. I've said it a little bit of a different way but it's the same argument that I've been making which is that you can't break the law in three markets just because you think you're going to be more competitive in some fourth market that's not a part of the complaint. We like where we are and we're focused on litigation and so far we are winning in this litigation. Thank you for addressing the footnote. That's something that caught our eye too as we were looking at the order this morning. And very lastly, what can those who are opposed to the merger, those perhaps who work in the entertainment community do now? You know, I will say, you called it, I think a public pressure earlier. I don't see this as public pressure. I see it as information that is helpful. We've had conversations with stakeholders who are in the industry who have talked to us about the impacts this proposed merger would have on them as workers, as creators. So, you know, we've talked to writers, we've talked to producers, we've talked to directors, we've talked to independent filmmakers, we've talked to people who work on crews on movie sets. And almost in a unanimous voice, we've heard of all of the adverse impacts that would occur in their views. You know, the loss of jobs, the lowering of wages, the decreased negotiation power, the higher prices, the less output, less content, less volume of, you know, movies and TV series being made, the less diversity of perspectives and viewpoints. You know, those were all themes that were that existed throughout all of those stakeholder engagements. And that was helpful to me, to understand from those people who are in this industry, who would be impacted by this merger, who live in it every day, what it would mean to them. And I think, and I honestly was inspired by the courage of so many of them to speak up and speak out. There are adverse consequences that they could suffer. They could be blacklisted. They might not be given jobs in the future, but yet they felt compelled to say what needed to be said about the impacts. And I think that is something that if people wish to do it, and want to do it, that's a powerful way of being participating in our democracy, of participating and engaging on an issue that's important to you, to speak up and speak out, speak your truth, speak your, you know, the facts and reality, as you understand it, about what this merger means to you, those you care about and this industry that you love. Well, thank you so much for your time, really appreciate you stopping by, Ancler agenda. My pleasure. Thanks for having me. Thank you so much for joining us at Ancler agenda. Special thanks to California attorney general Rob Bonta for stopping by and thanks, of course, to Sean McNulty and the Ancler himself Richard Rushfield. If you have any feedback for us, make sure you reach out at
[email protected]. I'm Eddie Lane at theancler.com. We always love hearing from you. Thanks so much for watching. We'll see you next time. [BLANK_AUDIO]
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