A federal judge has instructed Paramount Skydance and Warner Bros. Discovery to temporarily pause their $81 billion US merger for at least two weeks to allow states opposing the deal more time to present their case in court. Led by California, twelve states have filed a lawsuit to block Paramount’s acquisition of Warner, arguing that the merger would stifle competition in Hollywood, resulting in limited choices for consumers, specifically moviegoers and cable subscribers across the United States.
The state attorneys general urged the companies not to finalize the transaction until the court thoroughly assessed their concerns. When Warner and Paramount proceeded with the deal, the states sought a temporary restraining order, which District Judge Araceli Martínez-Olguín granted on Monday, potentially paving the way for a 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 from going forward, emphasizing the negative impact of concentrated market power on Americans’ lives. The proposed Warner-Paramount merger would unite two of the last five legacy studios in Hollywood, along with various TV networks, streaming titles, and news outlets.
While Paramount did not immediately comment on the court order, the company, acquired by Skydance last year, has vowed to vigorously defend its acquisition of Warner. Paramount has refuted the states’ allegations, asserting that the merger would enhance competition against larger entertainment rivals. The temporary restraining order halts the deal’s progression for at least two weeks, with a possibility of extension up to 28 days.
The court has scheduled a hearing on August 3 to consider the states’ motion for a preliminary injunction, with potential adjustments to the timeline. Paramount and Warner had aimed to conclude a preliminary injunction hearing by the end of August, allowing room for a potential appeal by September 30, a crucial date due to promised compensation to shareholders if the deal is not finalized by then.
Despite the companies’ proposed timeline, the states criticized it as unfair and unprecedented, advocating for a trial to start in April 2027 to ensure adequate time for discovery and evidence presentation. The overall value of Paramount’s proposed acquisition of Warner, including significant debt, stands at nearly $111 billion US, considering outstanding shares.
Apart from California, other states joining the legal action against the merger include Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington. Additionally, the Writers Guild of America is among the entities also suing to block the merger.