Judge temporarily halts Paramount-Warner Bros. Discovery merger

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. 

Paramount Skydance, the parent company of CBS News, did not immediately respond to a request for comment. Warner Bros. referred CBS News to Paramount.

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 less power for actors and writers and harm consumers by limiting their news and entertainment options. 

The 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. After the states issued their lawsuit, Paramount vowed to defend the transaction.

"The combination of Paramount and WBD will create a stronger, well-capitalized, creative-first media company that is better positioned to compete with companies like Netflix that have come to dominate the industry for audiences, premium content, and creative talent," a Paramount spokesperson said after the lawsuit was filed on July 13.

"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," New York Attorney General Letitia James said in a statement following the ruling.

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.