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A federal court issued a 14-day restraining order, siding with states that argue the massive media merger violates antitrust laws.
On Monday, a federal judge paused the $111 billion purchase of Warner Bros. by Paramount Skydance, throwing a wrench into the high-value acquisition.
Judge Araceli Martínez-Olguín of the U.S. District Court for the Northern District of California issued a restraining order for 14 days while she considers a lawsuit that argues the deal violates antitrust laws, The New York Times reported.
The pause was requested by 12 states, including California and New York, that have sued to block the deal. The states have argued that the deal would “give Paramount outsized dominance over the production of tentpole films, costly would-be blockbusters that sustain studio revenues, and basic cable channels,” The New York Times wrote.
Paramount reached a deal to buy Warner Bros. this year in one of the biggest media deals in history, beating competition from streaming giants like Netflix.
At a court hearing last week, Paramount argued that the states’ request was unnecessary, planning to defend its deal in court.
The Department of Justice (DOJ) is doing little merger enforcement right now, John M. Newman, the Herff Chair of Excellence at University of Memphis School of Law, told Inc.
“Deals are sailing through DOJ review despite raising serious red flags. So this DOJ taking a pass on blocking a merger signals little or nothing about the actual antitrust merits.”
The megamerger
The scale of this deal is entirely unprecedented. This is the largest media megamerger since Disney’s $71.3 billion acquisition of Twenty-First Century Fox in 2018.
Newman told Inc. that he believes there is strong evidence that this kind of merger would hurt consumers and workers alike, adding that, in the past, deals of smaller sizes have caused price hikes and job losses.
“Today’s decision is an important victory for all those who would be hurt by this merger, and I look forward to continuing to fight this case,” New York Attorney General Letitia James told Reuters.
The judge will hold a hearing on August 3 to decide whether the deal should be delayed throughout the course of the lawsuit. This may take months to reach a final ruling.
Warner Bros. Discovery referred its comment to the Paramount Skydance team. Paramount Skydance did not immediately respond to Inc.’s request for comment.
This post originally appeared at inc.com.
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