US District Judge Araceli Martínez-Olguín of the Northern District of California issued a temporary restraining order barring Paramount from closing the transaction.
A federal judge has temporarily blocked the $110 billion Paramount-Warner Bros merger, handing a win to 12 Democrat state attorneys general who sued to block the deal. US District Judge Araceli Martínez-Olguín of the Northern District of California issued a temporary restraining order barring Paramount from closing the transaction.
Martínez-Olguín scheduled an Aug. 3 hearing to consider whether to issue a preliminary injunction that would keep the merger on hold while the lawsuit proceeds. A coalition of states led by California Attorney General Rob Bonta sued to block the merger on July 13, arguing in a 38-page complaint that the deal would "extinguish competition" in Hollywood.
"The unlawful merger of these two entertainment behemoths would lead to higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately, audiences on every sofa and movie theater seat in the U.S.," Bonta said in a statement accompanying the filing per NBC.
Bonta and the other Democratic attorneys general have argued the transaction violates Section 7 of the Clayton Antitrust Act of 1914, which prohibits mergers that are likely to substantially lessen competition.
Paramount has pushed back against the lawsuit, claiming the states' efforts are "wrong on both the facts and the law" and that it is "one of the weakest merger challenges in modern antitrust history."
"We will vigorously defend the transaction and demonstrate that this challenge is inconsistent with sound competition policy and the competitive realities of the media marketplace," Paramount said in a statement.
The sooner the deal is completed, the better for Paramount, as the company is obligated to pay Warner Bros. Discovery 23 cents per share each quarter until the deal is finalized. Those payments could total as much as $600 million per quarter.
Paramount's media empire includes household names such as MTV and Nickelodeon, while Warner Bros. owns franchises like Batman and Superman, as well as CNN and HBO.
The lawsuit marks the biggest challenge to the merger since it was announced, but it is not its only challenge. EU regulators are also looking at the deal, while Britain's culture secretary has indicated she could intervene over concerns about media consolidation.
The merger has also faced legal challenges from organized labor and consumers. The Writers Guild of America filed a separate antitrust lawsuit, arguing the merger would reduce jobs and suppress wages for writers. A group of consumers also sued, claiming the combination of Paramount+ and HBO Max would harm competition, though Martínez-Olguín denied their request to temporarily block the merger.
The merger has also attracted the attention of President Donald Trump, who has not been shy about his desire for the company to undergo a change in leadership. "We're trying to have CNN go in a normal path," Trump told CNN's Jake Tapper during an on-air phone interview.
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