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A U.S. district judge temporarily halted the Paramount Skydance-Warner Bros. Discovery merger on Monday, after a coalition of states sued to block the deal.
The temporary restraining order will remain in effect for 14 days, with a hearing set for Aug. 3.
The states’ lawsuit “presented compelling evidence that the combined firm resulting from the transaction will possess substantial market share in the wide-release theatrical distribution market,” California district judge Araceli Martínez-Olguín wrote in the ruling. “On this combined firm market share alone, the Court is persuaded that it can presume the proposed merger is likely to violate antitrust laws.”
“Paramount and Warner Bros. will continue to operate as separate, viable companies competing in the marketplace while they wait for the Court to adjudicate this case,” she added.
Attorneys general in 12 states, led by California Attorney General Rob Bonta, sued last week, arguing that the merger would harm competition in the movie industry, result in lower pay for actors and writers and harm consumers by limiting their news and entertainment options.
A Paramount Skydance spokesperson called the states’ antitrust arguments “without merit.”
“This merger is lawful, pro-competitive, and will benefit consumers, creators, workers, and the entertainment industry,” the company said in a statement Monday. “We will continue to vigorously defend the transaction and will look forward to the hearings on the substance of the State AGs’ action.”
Warner Bros. referred CBS News to Paramount for comment.
Bonta issued a statement calling the judge’s ruling “a critical first win in our case to ensure this megamerger never sees the light of day.” He said the states are “fighting for a free and fair market and a thriving film and television industry that serves creatives and audiences alike.”
New York Attorney General Letitia James, who also joined the lawsuit, said, “Today’s decision is an important victory for all those who would be hurt by this merger, and I look forward to continuing to fight this case.”
The states’ lawsuit alleged that the merger would violate the Clayton Act of 1914, which prevents mergers that may undermine competition or create a monopoly.
Paramount has argued that combining with Warner Bros. will allow it to create more series and films and boost employment opportunities for industry professionals.
The $110 billion merger would unite two of the nation’s leading media companies, giving them control of nearly a third of cable programming and more than a third of blockbuster films, according to Bonta’s office.
