Judge to Decide on Temporary Halt to Paramount-Warner Bros. Discovery Merger

A federal judge in San Francisco heard arguments on Friday from a coalition of 12 states, led by California, that seeks a temporary restraining order to pause the proposed Paramount Pictures and Warner Bros. Discovery merger. The judge said a decision will be issued by the following Wednesday.

The states argue the deal would lessen competition in theatrical releases and basic cable, potentially raising prices and reducing output for consumers. Paramount’s lead counsel, Jeffrey Kessler, contended that the states have not demonstrated that the merger is anticompetitive and pointed to recent successful releases from new entrants as evidence that the theatrical market remains open.

"In this industry, talent is completely mobile. So actors, writers, directors — they go from studio to studio," Kessler said.

The states’ attorney, James Weingarten, countered that major distributors still dominate the market and that recent releases cited by Paramount were actually distributed by Warner Bros., underscoring the entrenched position of the five largest studios.

"That’s the power of the five majors. Apple is not in the movie business. They’re in the cellphone and laptop business," Weingarten said.

Judge Araceli Martinez-Olguin indicated that the market-concentration issues raised by the states may be sufficient to merit a restraining order, asking Kessler whether the evidence presented by Paramount strengthens concerns about the merger’s legality. She also highlighted the difficulty of undoing a merger if later found unlawful, referring to the challenge of "unscrambling the egg."

Kessler indicated Paramount’s priority is obtaining a preliminary injunction ruling by early September and offered to stipulate that the transaction not close within the next 30 days if a hearing on the injunction is scheduled for late August.

The parties discussed market data, with the states noting that roughly half of U.S. TV households—about 67 million—still subscribe to basic cable, and that the five largest theatrical distributors have maintained stable market shares for over a decade. The states claim the combined company would control about 30% of the market for top-grossing films and 50 of the 189 basic cable channels.

Kessler argued that the cable lineups of Paramount and Warner Bros. Discovery are complementary rather than overlapping, suggesting the merger would not diminish competition.

The hearing lasted about 75 minutes, and the judge will issue a ruling on whether to grant a temporary restraining order that could pause the merger for up to 28 days.