A federal judge has temporarily blocked Paramount Skydance from completing its $110 billion acquisition of Warner Bros. Discovery after 12 US states raised antitrust concerns. The 14-day order prevents the companies from closing the transaction before an August 3 hearing on a longer injunction.
US District Judge Araceli Martínez-Olguín found that the states had made a strong initial case that the acquisition could unlawfully reduce competition. The order gives the court more time to examine the possible effects before the companies combine their operations.
States Challenge Competition Across Film and Television
The coalition, led by California Attorney General Rob Bonta, filed its antitrust lawsuit on July 13. The participating states include Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.
The complaint alleges that the acquisition would reduce competition in wide-release film distribution, top-grossing theatrical releases and basic cable licensing. The states argue that the combined company could raise prices, reduce choices and weaken bargaining conditions for cinemas, cable distributors, workers and creators.
The transaction would combine Paramount Pictures and Warner Bros., along with the Paramount+ and HBO Max streaming services. It would also place CBS, MTV, CNN, HBO and other television networks within one company.
Bonta described the temporary order as an early victory in the states’ effort to stop the acquisition. The coalition can ask the court to extend the pause through a preliminary injunction while the lawsuit proceeds.
Paramount Rejects States’ Antitrust Claims
Paramount said the states’ proposed markets and claims of competitive harm do not reflect current conditions in the entertainment industry. The company maintains that the transaction is lawful and would benefit audiences, creators and workers.
Paramount and Warner Bros. Discovery signed their merger agreement on February 27. The companies have argued that their combined scale would help them compete more effectively with Netflix, Amazon, Apple and other technology-backed entertainment businesses.
The US Department of Justice cleared the transaction in June without requiring changes, but state attorneys general can bring separate challenges under federal antitrust law. Reviews also remain underway in some overseas jurisdictions.
August Hearing Could Extend Delay
Paramount Chief Executive David Ellison previously said the acquisition was expected to close by September. Under the agreement, a delay beyond September 30 could require Paramount to pay Warner Bros. Discovery shareholders about $7 million for each additional day.
The August 3 hearing will consider whether the court should prevent the transaction from closing throughout the states’ lawsuit. That process could continue for several months and place Paramount’s planned completion schedule at risk.
Featured image credits: Wikimedia Commons
For more stories like it, click the +Follow button at the top of this page to follow us.