Judge Temporarily Blocks $110 Billion Paramount Skydance–Warner Bros. Discovery Merger

A federal judge in California on Monday temporarily blocked the proposed $110 billion merger between Paramount Skydance Corp. and Warner Bros. Discovery Inc., handing a 12-state coalition an early court win in a closely watched antitrust fight that stands out because the U.S. Justice Department had already closed its own review without suing.

U.S. District Judge Araceli Martínez-Olguín of the Northern District of California granted a temporary restraining order barring the companies from “consummating the Transaction or otherwise acting to consolidate their operations” while the court decides whether to issue a preliminary injunction. In practical terms, the order preserves the status quo: The companies cannot close the deal or begin integrating while the next phase of the case is considered.

California Attorney General Rob Bonta is leading the lawsuit with attorneys general from Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington. The states sued on July 13 and sought emergency relief to stop the deal, which was announced Feb. 27. Court records say Paramount Skydance agreed to acquire all outstanding Warner Bros. Discovery shares for $31 per share, valuing the transaction at about $110 billion in enterprise value. The court heard oral arguments on the temporary restraining order Friday.

The states argue the merger would violate Section 7 of the Clayton Act, the federal antitrust law that bars acquisitions whose effect may be to substantially lessen competition. In plain terms, they say putting the two entertainment companies together would reduce rivalry in three businesses: wide-release theatrical film distribution, the distribution of anticipated top-grossing movies, and the licensing of basic cable channels to pay-TV distributors. Bonta has said the merger would lead to higher prices, lower content quality, and fewer movies and TV shows, allegations the states will have to prove as the case proceeds.

Martínez-Olguín’s ruling was limited but significant. At this early stage, the judge said the states had raised serious questions about the legality of the merger and indicated that allowing the deal to close before a fuller hearing could make any later remedy difficult because large corporate mergers can be hard to unwind once completed. The order is not a final determination that the merger is unlawful; it is a temporary measure meant to hold things in place until the court decides whether a longer-lasting preliminary injunction is warranted.

The case is unusual because federal and state enforcers have broken sharply over the same transaction. On June 12, the Justice Department’s Antitrust Division said it had completed its investigation and determined that “the transaction is not likely to result in harm to competition or American consumers.” Even so, the states moved ahead on their own under federal antitrust law and have now persuaded a federal judge to pause the deal, at least for the moment.

In a statement Monday, Bonta said, “My office and attorneys general nationwide have secured an emergency order blocking the unlawful merger of Warner Bros. and Paramount.” Paramount has rejected the states’ claims, calling the challenge “wrong on both the facts and the law” and arguing publicly that delaying the transaction harms consumers and creative talent. The immediate next step is the court’s decision on a preliminary injunction, which would determine whether the merger remains blocked for the duration of the litigation.