A federal judge has paused the merger between Paramount and Warner Bros. Discovery, valued at $81 billion, following a lawsuit from 12 states. Led by California, these states argue the merger would reduce competition in Hollywood, affecting consumers such as moviegoers and cable customers across the United States.
The states requested that Warner and Paramount delay the merger until the court fully assesses their claims. After refusal from the companies, the states sought a temporary restraining order, granted by District Judge Araceli Martínez-Olguín. This decision paves the way for a possible preliminary injunction aimed at blocking the merger.
“This is a critical first win in our case to ensure this megamerger never sees the light of day,” stated California Attorney General Rob Bonta.
According to Bonta, history shows that excessive market control by few can lead to fewer opportunities and subpar products for consumers.
The merger would unite two major Hollywood studios, along with various TV networks, streaming services, and news operations. This includes bringing Warner’s HBO Max together with Paramount’s CBS and Paramount+ streaming service.
Paramount hasn’t commented on the judge’s order but pledges to defend the merger energetically, claiming it would enhance competition rather than diminish it. Paramount also notes past clearances from regulatory bodies, including a recent approval from President Trump’s administration.
The restraining order halts the merger for at least 14 days, potentially extending to 28 days. A hearing on the states’ injunction motion is scheduled for August 3, though this might be delayed. Paramount originally aimed to finalize the merger by later this week, proposing to conclude a preliminary injunction hearing by the end of August. Their goal is to appeal by September 30, connected to shareholder compensation terms if delays occur.
The states find this timeline unfair, arguing that Paramount’s financial risks were self-decided. They suggest an April 2027 trial would allow sufficient time for thorough discovery and evidence presentation.
Factoring in debts, Paramount’s acquisition of Warner is valued at approximately $111 billion. States involved include Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington. The Writers Guild of America has also expressed opposition to the merger.