Court pauses Paramount-Warner deal for 14 days

A federal judge in California has temporarily halted Paramount Skydance’s proposed $110 billion acquisition of Warner Bros. Discovery, imposing a 14-day pause after state attorneys general challenged the deal on antitrust grounds. The order delays a transaction that would combine major film studios, broadcast, cable and streaming assets while regulators in several jurisdictions continue their reviews.

U.S. District Judge Araceli Martínez-Olguín approved the temporary restraining order on Monday after hearing arguments in Oakland on Friday. The lawsuit was brought by a group of state attorneys general led by California Attorney General Rob Bonta, who is seeking to block the merger.

The restraining order prevents the companies from taking further steps toward closing for two weeks. After that period, the states may seek another temporary restraining order or ask the court for a preliminary injunction, a longer-lasting form of relief that could keep the deal on hold while the case proceeds.

Antitrust challenge targets combined media reach

The proposed transaction would place Paramount’s film studio, CBS, Paramount+, and cable channels including MTV and BET together with Warner Bros.’ studio, HBO Max, CNN and TNT. The states argue in their complaint that the combined company would control close to one-third of films and roughly one-third of basic cable television programming.

Bonta described the merger as unlawful and said it would result in higher prices, reduced quality and less film and television content. He said the alleged harm would affect movie theaters, basic cable distributors and U.S. audiences.

Paramount has rejected the states’ position and has described the transaction as “pro-competitive.” In court papers filed Thursday, the company called the request for a temporary restraining order “one of the weakest merger challenges in modern antitrust history.”

Paramount argued in those filings that the deal would increase high-quality content for consumers, support investment in film production, help stabilize basic cable television amid cord-cutting, and increase theatrical releases.

Regulatory timetable and deal costs

Paramount’s lead trial counsel, Jeffrey Kessler, said on CNBC that the temporary restraining order request followed Paramount’s indication that it intended to close the deal as early as July 22, when the company expected to have all regulatory clearances.

The transaction remains under review by the European Union and the U.K., which set a new provisional deadline of July 22. The U.S. Department of Justice’s Antitrust Division cleared the tie-up in June, according to CNBC, and the companies have also received approvals in several other jurisdictions.

Paramount has said it expects to close the acquisition by the end of September. If the transaction extends beyond Sept. 30, the company could incur a ticking fee: an additional 25 cents per Warner Bros. Discovery share for each quarter until closing. CNBC reported that the fee would amount to about $650 million in cash value per quarter.

Paramount has also agreed to a $7 billion breakup fee tied to regulatory concerns, according to CNBC.

The case adds another court test for consolidation in the media sector. A separate proposed $6.2 billion merger between broadcast station owners Nexstar Media Group and Tegna has also been paused after a similar lawsuit and a preliminary injunction granted by a U.S. court. That challenge is also led by Bonta, according to the California attorney general’s office.

This story draws on original reporting from CNBC.