A federal judge has issued a temporary restraining order to put a pause on the $81 billion US merger between Paramount Skydance and Warner Bros. Discovery for at least two weeks. This order allows states opposing the deal more time to present their case in court.
Twelve states, led by California, have filed a lawsuit to block Paramount’s acquisition of Warner, arguing that the merger would stifle competition in Hollywood and reduce choices for consumers, especially movie buffs and cable subscribers nationwide.
The states have urged Warner and Paramount not to finalize the merger until their claims are thoroughly evaluated by the court. When the companies declined, the states sought a temporary restraining order, which was granted by District Judge Araceli MartÃnez-OlguÃn on Monday. This ruling paves the way for a potential preliminary injunction to prevent the merger from moving forward.
California Attorney General Rob Bonta hailed the court’s decision as a significant victory in their efforts to prevent the merger, emphasizing the potential negative impacts of consolidating market power in the entertainment industry.
A merger between Warner and Paramount would unite two major Hollywood studios along with a variety of TV networks, streaming content, and news outlets under one umbrella. This would bring together Warner’s assets like HBO Max and popular franchises such as Harry Potter, as well as Paramount’s offerings like Top Gun and Paramount+.
Paramount has not yet responded to the court order but has expressed its commitment to defending the merger with Warner vigorously. The company maintains that the merger would enhance competition in the industry, despite the opposition from various states and organizations.
The temporary restraining order effectively halts the merger process for a minimum of two weeks, with a possibility of extension up to 28 days. A hearing on the states’ motion for a preliminary injunction is scheduled for August 3, with potential adjustments to the timeline.
The states contest the proposed timeline for closing the deal, arguing that Paramount’s self-imposed deadline to avoid additional compensation to shareholders is unjust. They have proposed a trial date in April 2027 to allow sufficient time for discovery and presenting evidence.
The total value of Paramount’s bid for Warner, including debt, is estimated at nearly $111 billion US based on outstanding shares. Apart from California, other states involved in the lawsuit against the merger include Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington, with additional opposition from entities like the Writers Guild of America.