A 14-day restraining order halts a deal that would combine two of Hollywood's five major film studios and cable programmers
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U.S. District Judge Araceli Martínez-Olguín on Monday ordered a temporary halt to Paramount $PARA Skydance Corporation's $110 billion acquisition of Warner Bros. Discovery, giving a 12-state coalition more time to make its case that the deal would harm competition in film and cable television markets.
Following Friday's oral arguments, the judge granted a restraining order lasting 14 days, with the possibility of extension up to 28 days. Paramount and Warner Bros. had hoped to close the transaction by July 22. Martínez-Olguín also scheduled a hearing for Aug. 3 on whether to extend the block indefinitely through a preliminary injunction.
The judge wrote that the states had demonstrated "serious questions going to the merits remain," and noted that Paramount itself had conceded no harm from waiting until September's end. "Paramount and Warner Bros. will continue to operate as separate, viable companies competing in the marketplace while they wait for the Court to adjudicate this case," she wrote, concluding that equity considerations and the public's stake in antitrust enforcement weighed in favor of the order.
California Attorney General Rob Bonta, who leads the coalition, called the ruling 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.
The coalition, which includes Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington, filed the motion for a temporary restraining order the same day it sued to stop the merger. The states allege the combined entity would control roughly one-third of wide-release theatrical film distribution and nearly one-third of basic cable programming in the United States, according to Bloomberg. Post-merger, four companies would control more than 90% of the anticipated blockbuster film market.
In response, Paramount has cited the rise of studios like A24 and Amazon $AMZN MGM as evidence that theatrical distribution is a more open and dynamic arena than the states contend, while also challenging the reliability of the states' cable-market figures by pointing to that sector's overall contraction, according to Variety.
The injunction hearing is therefore a pivotal moment, according to Variety. A denial would likely allow the merger to proceed and prove nearly impossible to reverse, while a grant would put the deal at serious risk of collapsing well before any trial on the merits.
The case has serious financial consequences for Paramount either way. A $7 million per-day penalty begins accruing for Paramount on Sept. 30 for every day the deal remains unfinished, as established when the states filed suit last week. The company has until June 4, 2027, to close the deal under the merger agreement, according to Bloomberg.
The Justice Department cleared the deal last month without requiring any conditions, a decision that came after career antitrust staff had been leaning toward recommending a lawsuit. The European Union is separately reviewing the transaction.
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