A federal judge has temporarily blocked Paramount from completing its proposed $111 billion acquisition of Warner Bros Discovery (WBD), handing a coalition of state attorneys general an early victory in their effort to stop one of the largest media transactions in history.
In her order on Monday, U.S. District Judge Araceli Martínez-Olguín of the Northern District of California said the temporary restraining order that prevents Paramount from closing on the transaction will last for the next two weeks.
The order gives the court additional time to consider the states’ request for a longer preliminary injunction while preserving WBD as an independent company. A determination on that request was expected this week, but the judge has prolonged that part of the case, scheduling a hearing for August 3 where both sides will argue whether the injunction should be awarded or not.
California Attorney General Rob Bonta is leading the coalition of 12 states challenging the merger. The states filed a 38-page antitrust complaint on July 13, arguing the proposed combination would substantially reduce competition across several areas of the entertainment business.
The transaction would bring Paramount Pictures and Warner Bros Studios under common ownership, while combining streaming services Paramount Plus and HBO Max. The enlarged company would also control CBS, CNN and a broad collection of cable networks that includes TNT, MTV, BET, Nickelodeon and Cartoon Network.
“The unlawful merger of these two entertainment behemoths would lead to higher prices, lower quality and less content for film and television,” Bonta said when the lawsuit was filed.
The states contend the merger would increase Paramount’s leverage over movie theaters and pay television distributors while reducing competition for film projects, programming rights, creative talent and consumer attention.
Their lawsuit argues the transaction violates Section 7 of the Clayton Antitrust Act, which bars mergers and acquisitions when their likely effect would be to substantially lessen competition.
On Monday, Bonta took a victory lap after the judge overseeing the case issued the temporary restraining order.
“My office and attorneys general nationwide have secured an emergency order blocking the unlawful merger of Warner Bros and Paramount. This is a critical first win in our case to ensure this megamerger never sees the light of day,” Bonta said in a statement by e-mail. “History tells the tale of what happens when a few people have great power over markets that are central to Americans’ lives: fewer opportunities for more people, worse products and services for all people. With our lawsuit, we’re fighting for a free and fair market and a thriving film and television industry that serves creatives and audiences alike. We have a full tank of gas, the law on our side, and look forward to continuing to make our case.”
The temporary restraining order does not resolve the merits of the states’ case and does not permanently prevent Paramount from completing the acquisition. It instead maintains the current structure of both companies while the judge overseeing the case reviews the request for further relief.
The ruling adds uncertainty to a transaction that had been moving toward completion after receiving federal antitrust clearance. Paramount has argued the merger would create a stronger media company capable of competing more effectively with Netflix, Amazon, Apple and other technology-backed streaming businesses.
