Federal Judge Issues Temporary Halt to Paramount-Warner Bros. Discovery Merger

U.S. District Judge Araceli Martinez-Olguin in Oakland ordered a 14-day temporary restraining order on the proposed Paramount Pictures and Warner Bros. Discovery merger, citing serious antitrust concerns raised by a coalition of 12 states led by California. The judge said the states’ showing demonstrated “serious questions going to the merits” and that the public interest in antitrust enforcement outweighed any potential harm to the companies, which have agreed the delay will not affect them until the end of September.

The states are also seeking a preliminary injunction that would keep the merger on hold until the court decides the case on its merits. Martinez-Olguin set a hearing on the preliminary injunction for Aug. 3, with the possibility of extending the restraining order up to 28 days.

California Attorney General Rob Bonta welcomed the ruling, calling it a “critical first win” in the state’s effort to block the transaction.

Paramount has requested a hearing on the injunction with live testimony and hopes for a decision by early September. The company warned that if the merger does not close by Sept. 30, it could be liable for millions of dollars per day to Warner Bros. investors. Paramount argues that the deal would not harm competition, pointing to recent successes of new entrants such as A24 and Amazon MGM, and claims the merger could enhance competition in the streaming market. The judge rejected the argument that efficiencies in streaming could offset potential harms in other markets.

The states contend that combining two of the top three cable programmers and two of the top five film distributors would reduce competition in both basic cable and theatrical markets.