Judge Issues Temporary Stay on $110 Billion Paramount-Warner Bros Merger

The planned acquisition of Warner Bros. Discovery by Paramount Skydance has hit a snag as a judge has temporarily put the deal on hold due to a lawsuit by a group of 12 state attorneys general, who argue that the merger could harm competition.

On Monday, U.S. District Judge Araceli Martínez-Olguín announced a 14-day suspension after listening to arguments from both sides the week prior. The coalition, spearheaded by California Attorney General Rob Bonta, may seek an extension of this delay, potentially lengthening the merger process further.

The lawsuit from the states asserts that the merger would negatively impact movie theaters, basic cable providers, and viewers. They claim that permitting the two companies to combine would reduce competition in three critical sectors: wide release theatrical film distribution, “top-grossing” theatrical distribution, and basic cable licensing.

“This is a significant initial victory in our effort to block this megamerger from moving forward,” said Attorney General Bonta. “History illustrates the risks posed by a few players wielding substantial power over markets that greatly affect the lives of Americans: diminished opportunities for many, and lower-quality products and services for all. Through our lawsuit, we are fighting for a fair and open marketplace and a thriving film and television industry that serves both creators and audiences. We are fully prepared, aligned with the law, and eager to pursue our case.”

The deal aims to merge two major film studios alongside the streaming platforms Paramount+ and HBO Max, creating one of the most extensive collections of television networks, integrating Paramount’s CBS and MTV with WBD’s CNN and HBO.

In May, Paramount CEO David Ellison stated that the deal was on target to conclude by September. This legal challenge could hinder Paramount’s aspirations of becoming a notable competitor to companies like Netflix.

The proposed acquisition has faced criticism from filmmakers, actors, and industry experts who contend that the merger would diminish competition and further consolidate the U.S. media landscape.

Paramount and WBD have yet to respond to TechCrunch’s requests for comments.