A federal judge has ordered a temporary halt to the $81 billion US merger between Paramount Skydance and Warner Bros. Discovery for at least two weeks. This decision allows several states, including California, more time to pursue their legal challenge against the deal.
The states argue that the merger would stifle competition in Hollywood, resulting in limited choices for consumers, particularly moviegoers and cable subscribers across the country. The top prosecutors of these states urged Warner and Paramount to postpone finalizing the transaction until the court thoroughly reviews their objections. When the companies declined, the states sought a temporary restraining order, which was granted by District Judge Araceli MartÃnez-OlguÃn on Monday.
California Attorney General Rob Bonta hailed the court’s decision as a crucial step in preventing the merger from moving forward. He emphasized the potential negative impacts of concentrated market power on Americans’ lives, citing fewer opportunities and inferior products and services.
A combined Warner-Paramount entity would unite two of Hollywood’s last five legacy studios, along with a variety of TV networks, popular titles, streaming services like HBO Max, beloved franchises such as Harry Potter, and news outlets like CNN. Paramount, acquired by Skydance last year, has pledged to vigorously defend the merger, arguing that it would enhance competition against larger entertainment competitors.
The temporary restraining order puts a hold on the merger for at least two weeks, with the possibility of extension up to 28 days. A hearing on the states’ motion for a preliminary injunction is scheduled for August 3, subject to potential delays. The companies had aimed to complete the merger by late August, triggering additional compensation to shareholders if the deadline is missed.
The states have criticized the proposed timeline as biased and unprecedented, advocating for a trial to commence in April 2027 to allow for thorough discovery and evidence presentation. Including substantial debt, the proposed acquisition of Warner by Paramount is currently valued at nearly $111 billion US based on outstanding shares.
In addition to California, the lawsuit against the merger includes states such as Arizona, Colorado, Connecticut, Massachusetts, Minnesota, and others. The Writers Guild of America is also among the parties seeking to block the merger.