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A federal judge has paused Paramount Skydance’s acquisition of Warner Bros. Discovery after a coalition of 12 states challenged the merger over possible violations of antitrust laws.
The lawsuit, filed last week, argues that a merger between two of Hollywood’s five biggest studios would reduce competition and lead to price hikes, lower quality, and less content for viewers of film and television.
The states, led by California Attorney General Rob Bonta, sought an injunction and a temporary restraining order (TRO) to pause the deal while the lawsuit proceeds. As Variety reports, Judge Araceli Martinez-Olguin with the US District Court for the Northern District of California heard arguments on Friday and granted a 14-day restraining order blocking Paramount and WBD from closing the deal.
The merger could give the resulting company up to 27% of the theatrical distribution market, and by that figure alone, “the Court is persuaded that it can presume the proposed merger is likely to violate antitrust laws,” Judge Martinez-Olguin writes in her order, adding that the absence of a TRO would result in “irreparable harm.”
The judge also offered an encouraging indication regarding the states’ primary request, stating that their “showing at least demonstrates that serious questions going to the merits remain, weighing in favor of preliminary injunctive relief.”
The merger is worth $110 billion and would create a company that would own Paramount Television Studios, CBS Studios, and Warner Bros. Television Studios, as well as streaming services such as Paramount+, HBO Max, and Discovery+, and cable networks such as BET, Comedy Central, MTV, and Nickelodeon.
Paramount had already indicated it wouldn’t close the deal before July 22. Now, the deal is blocked for two weeks, with a hearing for the preliminary injunction set for Aug. 3.
