A federal judge has issued a ruling to temporarily stop the $81 billion US merger between Paramount Skydance and Warner Bros. Discovery for at least two weeks. This decision allows states opposing the deal more time to present their case in court. Twelve states, led by California, filed a lawsuit last week to prevent Paramount’s acquisition of Warner, arguing that the merger would eliminate competition in Hollywood, resulting in limited choices for consumers nationwide, especially moviegoers and cable subscribers.
The state prosecutors urged Warner and Paramount not to finalize the merger until the court thoroughly reviewed their concerns. When the companies proceeded with the deal, the states sought a temporary restraining order, which was granted by District Judge Araceli Martínez-Olguín. This ruling could pave the way for a potential preliminary injunction to block the merger entirely.
California Attorney General Rob Bonta hailed the court’s decision as a significant victory in their efforts to prevent the megamerger, emphasizing the negative impact of concentrated market power on consumer options and quality of services. The proposed tie-up between Warner and Paramount would unite two of the last five legacy studios in Hollywood, along with various TV networks, popular titles such as “Harry Potter,” and networks like CNN under the umbrella of Paramount-owned CBS.
While Paramount has not yet commented on the court order, the company, recently acquired by Skydance, has vowed to vigorously defend the Warner acquisition. Paramount argues that the states’ allegations are unfounded and that the merger would enhance competition against larger entertainment competitors. The court’s temporary restraining order delays the merger for a minimum of two weeks, with a potential extension of up to 28 days. A hearing on the states’ preliminary injunction motion is scheduled for August 3, subject to possible delays.
Several states, including California, Arizona, Colorado, and New York, have joined the lawsuit against the merger, along with organizations like the Writers Guild of America. Paramount’s proposed purchase of Warner, including substantial debt, is valued at nearly $111 billion US based on outstanding shares. The states opposing the merger argue that Paramount’s self-imposed deadline for closing the deal by September 30, to avoid additional compensation to shareholders, is unjust and unprecedented. They advocate for a trial starting in April 2027 to allow for proper evidence presentation and discovery.