US judge temporary halts Paramount-Warner entertainment giant merger

Paramount Skydance’s $110 billion takeover of Warner Bros. Discovery hit a setback Monday after a US federal judge temporarily blocked the entertainment mega-merger at the request of attorneys general from 12 states.

US District Judge Araceli Martinez-Olguin issued a 14-day restraining order preventing the deal from closing and set an Aug. 3 hearing on a preliminary injunction that could delay the transaction further.

The states, led by California Attorney General Rob Bonta, sued on July 13, arguing the merger would “extinguish competition” in Hollywood.

“The unlawful merger of these two entertainment behemoths would lead to higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately, audiences on every sofa and movie theater seat in the U.S.,” Bonta said in a statement, according to NBC News.

The lawsuit argues the deal violates Section 7 of the Clayton Antitrust Act by reducing competition in theatrical film distribution, blockbuster releases, and basic cable channel distribution.

Paramount rejected the claims, calling the lawsuit “wrong on both the facts and the law” and describing it as “one of the weakest merger challenges in modern antitrust history.” The company noted it has already secured Justice Department approval, along with clearances in countries including Australia and China.

“We will vigorously defend the transaction and demonstrate that this challenge is inconsistent with sound competition policy and the competitive realities of the media marketplace,” Paramount said.

The company is under pressure to complete the merger before Sept. 30, when it would begin paying Warner Bros. shareholders a quarterly “ticking fee” of 25 cents per share—amounting to more than $600 million each quarter.

The combined company would unite Paramount’s film studio, Paramount+, CBS, MTV and Nickelodeon with Warner Bros.’ film studio, CNN, HBO, and franchises including DC Comics heroes Batman and Superman.