NEW YORK (AP) 鈥� A federal judge on Monday ordered Paramount and Warner Bros. Discovery to halt for at least two weeks, allowing more time to see their case through in court.
Twelve states, led by California, sued to block Paramount鈥檚 pending buyout of Warner last week 鈥� alleging that such a combination would 鈥渆xtinguish competition鈥� in Hollywood and lead to fewer choices for consumers, particularly moviegoers and cable customers across the U.S.
The states鈥� top prosecutors called on Warner and Paramount to not close the transaction until after a court had time to fully evaluate their claims. And when the companies refused, they filed for a temporary restraining order 鈥� which is what District Judge Araceli Mart铆nez-Olgu铆n granted on Monday. That opens the door to a potential preliminary injunction that the states are also seeking to effectively block the deal.
鈥淭his is a critical first win in our case to ensure this megamerger never sees the light of day,鈥� California Attorney General Rob Bonta said in a statement Monday. 鈥淗istory tells the tale of what happens when a few people have great power over markets that are central to Americans鈥� lives: fewer opportunities for more people, worse products and services for all people.鈥�
A Warner-Paramount tie-up would bring together in Hollywood 鈥� as well as a host of TV networks, titles filling streaming libraries and news operations. Warner鈥檚 HBO Max, fan favorites like 鈥淗arry Potter鈥� and would come under the same roof of Paramount-owned CBS, movies like 鈥淭op Gun鈥� and the Paramount+ streaming service.
Paramount, which was bought out just last year, has vowed to vigorously defend its acquisition 鈥� and touts regulatory greenlights the deal has received elsewhere, including from last month.
On Monday, Paramount said the states’ antitrust arguments 鈥渁re without merit鈥� or 鈥渁ny basis in modern market realities” 鈥� and maintained that its merger with Warner will benefit consumers and workers alike. Timing for next steps also falls in line with the company’s previous requests.
Deal is paused for at least two weeks
The temporary restraining order granted Monday halts the deal from progressing for at least 14 days, although the pause could be extended for up to 28 days. The court has set Aug. 3 as a date for a hearing on the states’ preliminary injunction motion, but that schedule could also be pushed back.
The clock is ticking. Ahead of Monday鈥檚 decision, the companies proposed wrapping up a preliminary injunction hearing by the end of August, leaving time to make a possible appeal by Sept. 30 鈥� a date on the top of Paramount鈥檚 mind because it鈥檚 pledged to pay shareholders added 鈥渢icking fee鈥� compensation amounting to about $7 million per day if the deal isn鈥檛 closed by then.
But the states called such a timeline unprecedented and unfair. They maintain that payments Paramount might have to incur after Sept. 30 were the risk of a decision the company made on its own 鈥� and argued in a hearing held Friday that commencing a trial in April 2027 would allow enough time for discovery and presenting proper evidence.
Including billions of dollars in debt, Paramount鈥檚 proposed purchase of Warner is currently valued at nearly $111 billion based on outstanding shares.
What the states are challenging
Paramount has repeatedly pointed to tech and streaming companies鈥� growing reach across the entertainment industry 鈥� and argues that merging with Warner would particularly help it compete with bigger rivals like Netflix. Last week, it said the states鈥� challenge would help shield Netflix and others 鈥渨ho have harmed the market for theatrical exhibition鈥� from meaningful competition.
The states鈥� case doesn鈥檛 focus on streaming. It alleges that a combined Paramount-Warner merger violates federal antitrust law because of what the companies鈥� combined reach would become across three markets: theatrical movie distribution, theater releases of bigger blockbusters and the licensing of basic cable channels.
Their complaint says a combined Paramount-Warner could control nearly a third of both the theatrical film distribution market as well as basic cable programming. The states argued this would create a 鈥渕edia behemoth” with enough power to both raise prices for consumers and threaten workers鈥� wages, while reducing production and quality of content.
In terms of movie theater releases, Paramount鈥檚 lawyers have pointed to a growing list of blockbuster hits from studios that are not in Hollywood鈥檚 鈥渂ig five,鈥� such as A24 and Amazon鈥檚 MGM. The states maintain the core legacy studios 鈥� which beyond Warner and Paramount include Disney, Universal and Sony 鈥� still make up the vast majority of the market.
Beyond California, states challenging the deal include Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.
Other regulatory clearances
Outside of the U.S., Paramount has touted greenlights from regulators in countries like China, Canada and Australia. But regulatory reviews are also ongoing in the European Union and the U.K., which has separately suggested it may intervene.
Meanwhile, the Writers Guild of America has seeking to block the merger. And Paramount faces additional legal fights, including from a shareholder accusing CEO David Ellison and his father Larry Ellison (who is to back the deal for his son鈥檚 company) of promising 鈥渋llegal, private benefits鈥� to Trump in order to get the merger through.
Paramount has repeatedly dismissed such accusations, and the U.S. Justice Department maintained its review was not political.
Still, politics have come into question throughout Paramount’s quest for Warner. Beyond Trump鈥檚 relationship with the Ellison family, critics of the deal also stress what new ownership could mean for Warner assets like CNN 鈥� a network that has long attracted ire from the Republican president 鈥� particularly in light of since Skydance鈥檚 takeover.
The contrast between the 12 states鈥� complaint, brought forth by all Democratic attorneys general, and the federal government鈥檚 blessing only underlines all of that further.
鈥淚t鈥檚 a political merger. It鈥檚 the product of the president鈥檚 engagement in private business affairs,鈥� New York Attorney General Letitia James said in a webinar about the states’ case last week. She maintained the states had been successful in challenging the Trump administration before and “we’re not finished yet.鈥�
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