A federal judge has temporarily blocked Paramount Skydance’s $110 billion acquisition of Warner Bros. Discovery, granting a restraining order just days before the companies expected to finalize the deal. U.S. District Judge Araceli Martínez-Olguín issued the 14-day order Monday after a coalition of 12 state attorneys general, led by California’s Rob Bonta, sued to stop the transaction on antitrust grounds.
The states argue the merger would combine two of the industry’s top three cable programmers and two of its top five film distributors, reducing competition in wide theatrical releases, top-grossing film distribution and basic cable licensing. Their lawsuit warns of higher prices, fewer shows and films, and job losses across the entertainment sector. Michele Mulroney, president of WGA West, said the deal would strip away competition in an industry already concentrated among a handful of players.
Martínez-Olguín’s order bars Paramount and Warner Bros. from closing the transaction or taking steps to combine operations while the case proceeds. In her ruling, she found that the balance of equities and the public interest in antitrust enforcement favored a pause, noting that Paramount itself had conceded a short delay would not cause it harm. A hearing on a longer preliminary injunction is set for Aug. 3.
Paramount has rejected the states’ claims, calling the legal challenge one of the weakest antitrust cases brought against a modern merger and arguing that the theatrical market has grown more competitive with the rise of newer distributors like A24 and Amazon MGM. A company spokesperson said Paramount remains confident the evidence will show the states’ claims lack grounding in current market conditions and vowed to keep defending the deal through the coming hearings.
The financial stakes are steep. Under the terms of the merger financing, Paramount would begin owing Warner Bros. Discovery investors roughly $650 million per quarter starting Sept. 30 if the deal remains unclosed, a penalty structure that adds pressure to resolve the dispute quickly. Shares of both companies dipped following the ruling before Paramount’s stock recovered much of its loss by midday trading. The deal, which beat out a competing bid from Netflix when it was struck in February, would place Warner Bros.’ studios, streaming service and CNN under the control of Paramount chief executive David Ellison.
