A federal judge has ordered Paramount and Warner Bros. Discovery to pause their proposed $81 billion merger for a minimum of two weeks. This decision allows the states opposing the deal more time to advance their case in court. A total of twelve states, led by California, have filed a lawsuit to block Paramount’s acquisition of Warner Bros. They argue that the merger would reduce competition in Hollywood, limiting choices for moviegoers and cable customers nationwide.
The states’ prosecutors requested Warner and Paramount delay closing the deal until a court fully evaluates their claims. After the companies refused, a temporary restraining order was sought and granted by District Judge Araceli Martínez-Olguín. This order could lead to a preliminary injunction that the states are pursuing to permanently block the merger.
“This is a critical first win in our case to ensure this megamerger never sees the light of day,” stated California Attorney General Rob Bonta. He expressed concerns over market concentration leading to fewer opportunities and poorer products and services.
A Warner-Paramount merger would unite two of the last five traditional Hollywood studios, including TV networks, streaming libraries, and news operations. Warner’s HBO Max, popular franchises like “Harry Potter,” and CNN would merge with Paramount-owned CBS, “Top Gun,” and the Paramount+ service.
Paramount has not commented on the order but has vowed to vigorously defend the acquisition. The company disputes the states’ claims, arguing the merger will enhance competition against larger rivals. Paramount highlighted regulatory approvals received internationally, including from the Trump administration.
The temporary restraining order pauses the merger for at least 14 days, with a possible extension to 28 days. A hearing for the states’ preliminary injunction motion is scheduled for August 3. However, this timeline may be adjusted.
Before the judge’s decision, Paramount and Warner aimed to close their merger deal soon. They proposed resolving the preliminary injunction by late August to allow time for appeals by September 30. This date is crucial due to a commitment to pay shareholders an additional “ticking fee” of approximately $7 million per day if the deal is delayed.
The states have labeled this timeline unprecedented and argued the financial implications for Paramount remain their responsibility. They suggested a trial in April 2027 to ensure sufficient time for evidence collection.
The proposed purchase, factoring in debt, values Paramount’s acquisition of Warner at nearly $111 billion based on outstanding shares. Apart from California, states involved in the lawsuit include Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington. The Writers Guild of America is also suing to prevent the merger.