Paramount’s plan to close its $110 billion merger with Warner Bros. Discovery before the end of July is now in jeopardy. A California federal judge stepped in Monday with a temporary restraining order, putting the brakes on the deal.
U.S. District Judge Araceli Martínez-Olguín issued the 14-day order after a coalition of 12 states, led by California, argued the merger would cause irreparable harm to competition. Paramount stock fell roughly 1.4% on the news, while Warner Bros. Discovery (WBD) dropped around 1.5%.
Paramount Skydance Corporation Class B Common Stock, PSKY
The states filed their antitrust lawsuit on July 13 in Oakland federal court. They claim the combined company would gain enough control over film and television to raise prices on consumers.
A key argument from the states was timing. They said letting the deal close — even temporarily — would allow Paramount to begin cutting jobs and sharing sensitive business information with Warner Bros. Discovery.
Those actions, the states argued, would be nearly impossible to undo if a court later ruled the merger illegal. The judge appeared to agree, at least enough to pause things while the legal challenge plays out.
A hearing is scheduled for August 3, where the court will decide whether to extend the block for the duration of the antitrust trial.
Paramount has not taken the order quietly. The company said the states’ lawsuit misrepresents established antitrust law.
Paramount also argued that delaying the deal would hurt entertainment workers — people who have already dealt with years of disruption in the industry.
CEO David Ellison has made the Warner Bros. Discovery deal central to his strategy for transforming Paramount into a serious rival to Netflix and Disney.
The merger was valued at $81 billion in some reports and $110 billion in others, depending on what liabilities are included in the calculation. Either way, it’s one of the largest media deals in recent memory.
California led the charge, but 11 other states signed on to the lawsuit, giving it broad geographic weight.
If the court grants a preliminary injunction at the August 3 hearing, the companies would be barred from closing the merger for the entire duration of the antitrust case — which could take months or longer.
The 14-day restraining order alone has already pushed Paramount past its self-imposed end-of-July deadline for closing.
WBD shares were down approximately 2.33% to 2.44% across different reports on Monday.
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