US judge halts Paramount's merger with Warner Bros: Here is why

The federal judge in California ordered Paramount Skydance and Warner Brothers Discovery to temporarily pause the collaboration while the case is in court.

In the latest update, the companies are prohibited from closing their $110 billion deal for 14 days until another hearing is held on August 3 regarding a preliminary injunction, which would prevent Paramount and Warner Brothers from closing the transaction before a final decision is reached.

The states raised “serious questions” about the deal’s potential to be anticompetitive, the judge said in her ruling, adding that “the balance of equities and public interest tip sharply in favor of the Plaintiff States.” Last week, 12 states led by California sued to block the deal in a direct challenge to the Trump administration’s Justice Department, which approved the merger last month.

In a statement on Monday, California Attorney General Rob Bonta hailed the temporary restraining order as “a critical first win in our case to ensure this megamerger never sees the light of day.”

A Paramount spokesperson told Variety that the company is “grateful for the Court’s swift order” and underlined that it “preserves the status quo while the Court considers the antitrust issues presented.”

The combined company, which came about after Netflix bowed out of the battle to buy Warner Brothers, would control a sprawling roster of assets, including CNN, Warner Bros Pictures and the HBO Max streaming service. In their complaint, the states claim the combined company would control roughly 27% of wide-release theatrical film distribution and a similar percentage of basic cable channel licensing.

The saga has become politically charged, with President Donald Trump publicly saying he would weigh in on the deal as the fate of CNN, a frequent target of the president’s ire, hangs in the balance.

California’s attorney general said last week that the combination of two of Hollywood’s five major film distributors would lead to “higher prices, lower quality, and less content” for audiences. “California and our sister states are fighting for free and fair markets, not rigged markets. America has no kings in government or our economy,” Bonta said.

The other 11 states joining the suit, all Democratic-led, are Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.

Paramount pushed back on the suit’s allegations, framing their deal as a boon for competition in the media industry. “This merger is lawful, pro-competitive, and will benefit consumers, creators, workers, and the entertainment industry,” the Paramount spokesperson said. “We will continue to vigorously defend the transaction and will look forward to the hearings on the substance of the State AGs’ action.”

The Trump administration approved the blockbuster deal on June 12 without demanding a single change, clearing the way for one of the largest media mergers in years. It was a major win for media mogul David Ellison; his father, Oracle co-founder Larry Ellison, largely financed the takeover and is a Trump ally.

Earlier, the battle over Warner Brothers began last year, when media giants Netflix and Paramount went to war over the famed movie studio and its prized back catalog. A wary Tinseltown reluctantly lined up behind Netflix as the lesser of two evils, only to watch Paramount keep raising its bid until the streamer walked away in February.