Paramount Skydance (NASDAQ:PSKY) stock hit new 52-week lows Monday on the heels of a judge pausing the company’s megamerger with Warner Bros. Discovery (NASDAQ:WBD). Here’s the update.
Judge Pauses Merger
A recent lawsuit presented by 12 states against the merger has led U.S. District Judge Araceli Martínez-Olguín to issue a temporary restraining order preventing the merger from moving forward.
The lawsuit raises questions about the anticompetitive nature of the combination, which would see one company own multiple movie studios, TV news stations and the HBO Max and Paramount+ streaming services, as reported by The Washington Post.
California Attorney General Rob Bonta said the decision is a "critical first win in our case to ensure this megamerger never sees the light of day." California is the lead on the case and is joined by Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.
"History tells the tale of what happens when a few people have great power over markets that are central to Americans’ lives: fewer opportunities for more people, worse products and services for all people," Bonta said.
Paramount Skydance said they are "confident the evidence will demonstrate that the State AGs’ antitrust arguments are without merit" in a statement, as reported by The Washington Post. The company said claims of anticompetitive behavior are "without any basis."
"This merger is lawful, pro-competitive, and will benefit consumers, creators, workers, and the entertainment industry,” the company said. "We will continue to vigorously defend the transaction and will look forward to the hearings on the substance of the State AGs’ action."
Read Also: Making Fun of Trump Pays Off for Colbert & Kimmel: Late Night Hosts Score Record Emmy Nominations
What Happens Next
The emergency ruling by the judge pauses the merger for 14 days. The parties are expected to be back in court on Aug. 3, which could lead to a longer injunction against the merger.
An extended timeline could begin to impact Paramount Skydance financially beginning in October. The company will need to pay Warner Bros. Discovery shareholders $650 million per quarter, or $6.9 million daily beginning Sept. 30 if the transaction hasn’t been closed, according to The Hollywood Reporter.
Aside from the state lawsuit, there are multiple other cases against the merger, including one from the Writers Guild of America and a shareholder lawsuit that involves President Donald Trump.
Stock Price Action
Paramount Skydance stock is down 0.5 to $8.70 on Monday, with shares hitting a new 52-week low of $8.56 earlier in the trading session.
Warner Bros. stock is down 3.3% to $25.98 on Monday.
Read Also: Warner Bros. CEO Zaslav Sells $59 Million in Stock as Paramount Skydance Merger Faces New Hurdles
Image via Shutterstock
