Paramount and Warner must halt merger for at least two weeks, judge says

A federal judge on Monday ordered Paramount and Warner Bros

NEW YORK -- A federal judge on Monday ordered Paramount and Warner Bros. Discovery to halt their $81 billion merger for at least two weeks, allowing states that are challenging the deal more time to see their case through in court.

Twelve states, led by California, sued to block Paramount’s pending buyout of Warner last week— alleging that such a combination would “extinguish competition” in Hollywood and lead to fewer choices for consumers, particularly moviegoers and cable customers across the U.S.

The states’ 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 — which is what District Judge Araceli Martínez-Olguín granted on Monday. That opens the door to a potential preliminary injunction that the states are also seeking to effectively block the deal.

“This is a critical first win in our case to ensure this megamerger never sees the light of day,” California Attorney General Rob Bonta said in a statement following Monday's order. “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.”

A Warner-Paramount tie-up would bring together two of the five last legacy studios in Hollywood — as well as host of TV networks, titles filling streaming libraries and news operations. That would include Warner’s HBO Max, fan favorites like “Harry Potter” and even CNN coming under the same roof of Paramount-owned CBS, movies like “Top Gun” and the Paramount+ streaming service.

Paramount did not immediately comment on Monday's order. But the company, which was bought out by Skydance just last year, has vowed to “vigorously defend” its Warner acquisition. Paramount previously called the states’ complaint “wrong on both the facts and the law,” maintaining that a merger would instead strengthen competition against bigger entertainment rivals. And it touted regulatory greenlights the deal has received elsewhere, including from the administration of President Donald Trump last month.

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, although that schedule could also be pushed back.

The clock is ticking. Many were previously bracing for Paramount and Warner to try closing their deal as soon as later this week. And ahead of Monday’s 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 — a date on the top of Paramount’s mind because it’s pledged to pay shareholders added “ticking fee” compensation amounting to about $7 million per day if the deal isn’t closed by then.

But the states called such a timeline unprecedented and unfair. They maintain that money Paramount might have to incur after Sept. 30 was the risk of a decision the company made on its own — and argued in a hearing held Friday that commencing a trial in April 2027 would allow enough time to for discovery and presenting proper evidence.

Including billion of dollars in debt, Paramount’s proposed purchase of Warner is currently valued at nearly $111 billion based on outstanding shares.

Beyond California, states joining Monday’s lawsuit include Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington. And others — including the Writers Guild of America — are also suing to block the merger.

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