A federal judge on Monday stopped Paramount Skydance and Warner Bros. Discovery from closing their proposed merger, handing California Attorney General Rob Bonta and 11 other Democratic state attorneys general their first win in overriding a deal the federal government had already cleared.
U.S. District Judge Araceli Martínez-Olguín issued a temporary restraining order that will remain in place for 14 days. Paramount and Warner Bros. may not close the deal or begin combining their operations during that time. A hearing on a longer preliminary injunction is scheduled for August 3.
Martínez-Olguín was nominated by Joe Biden and confirmed only after then-Vice President Kamala Harris cast the tie-breaking vote in a 48-48 Senate deadlock.
Paramount’s agreement values Warner Bros. Discovery at $81 billion in equity and $110 billion when debt is included. The combined company would house Warner Bros., HBO Max, CNN, CBS, Paramount+, and two of Hollywood's largest movie studios, assets a Biden judge just helped keep out of a merger the Trump administration had already blessed.
Strange Bedfellows Combine to Attempt to Block New Media Merger
The Trump administration’s Justice Department cleared the deal in June. After completing its investigation, the department said the merger was unlikely to harm competition in streaming, linear television, or theatrical film production and distribution.
Bonta and the other attorneys general disagreed, and sued. Bonta called it "a critical first win in our case to ensure this megamerger never sees the light of day," adding that "history tells the tale of what happens when a few people have great power over markets that are central to Americans' lives."
Their lawsuit accuses Paramount and Warner Bros. of trying to eliminate a major competitor in wide-release movies, anticipated blockbusters, and basic cable programming, a theory the Trump DOJ had already reviewed and rejected. The states estimate that the merged company would control 27 percent of wide-release theatrical distribution.
Martínez-Olguín limited Monday’s analysis to that market. She found that the states had produced enough evidence to keep the companies separate while the case proceeds.
"Plaintiff States' showing at least demonstrates that serious questions going to the merits remain, weighing in favor of preliminary injunctive relief."
The states' expert calculated that the merger would increase the market's concentration index by 359 points, bringing it to 2,074. Paramount challenged the states' market definition but offered no competing numbers of its own.
Paramount has argued that the entertainment industry now includes newer competitors such as Amazon MGM and A24. It also says the merger would create a stronger streaming rival to Netflix and Amazon.
The judge rejected the streaming argument outright. Martínez-Olguín wrote in a footnote that possible gains in streaming could not be used to excuse competitive harm in the theatrical market.
Paramount pushed back.
“This merger is lawful, pro-competitive, and will benefit consumers, creators, workers, and the entertainment industry. We will continue to vigorously defend the transaction.”
The temporary order also addressed what could happen if the companies closed before the court ruled. Martínez-Olguín pointed to the exchange of sensitive business information, the consolidation of operations, and possible employee firings or reassignments. Separating the companies again could prove difficult or impossible.
Paramount had already conceded that a short delay would not create immediate financial harm. According to the order, the company will not begin incurring costs tied to a delayed closing until the end of September.
For now, Paramount and Warner Bros. remain competitors. Whether they stay that way beyond August 3, and whether a deal on the clock survives a prolonged court fight, will depend on the next round.
Editor’s Note: Hollywood, academia, and liberal elites are out of touch with the average American.
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