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*Paramount and Warner Bros. must remain separate while a federal court considers whether their proposed merger poses an illegal threat to competition.
Judge Araceli Martinez-Olguin granted a 14-day restraining order Monday, preventing the companies from completing the transaction during the opening stage of a multistate antitrust fight, Variety reports. The pause may be extended to 28 days.
California is leading the 12-state coalition challenging the agreement. The states want the court to impose a preliminary injunction that would keep the companies apart until their lawsuit is decided.
Their case focuses on the combined company’s potential influence over two areas of the entertainment business. The merger would unite two of the three largest cable programmers and two of the five biggest theatrical distributors, according to the complaint.
State officials argue that reduced competition could eventually result in higher costs, fewer releases and limited options for audiences and creators.
Martinez-Olguin determined that the challengers had presented serious unresolved questions. She also found little immediate risk in requiring Paramount and Warner Bros. to continue competing independently while the case advances.
A hearing on the states’ request for a preliminary injunction is scheduled for Aug. 3, although the parties could agree to move that date.
California Attorney General Rob Bonta celebrated the temporary order as a “critical first win in our case to ensure this megamerger never sees the light of day.”
“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,” Bonta said.
Paramount maintains that combining with Warner Bros. would create a more formidable streaming rival to Netflix and Amazon. Martinez-Olguin, however, said potential gains in streaming cannot be used to excuse possible harm in separate markets.
Paramount wants a ruling by early September, while a delay beyond Sept. 30 could trigger daily payments worth millions of dollars to Warner Bros. investors.
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