US judge halts Paramount Skydance’s $110 bn Warner Bros deal until August 3

MUMBAI: It’s lights, camera… pause. A US federal judge has temporarily blocked Paramount Skydance from completing its proposed $110 billion acquisition of Warner Bros. Discovery, handing an early victory to a coalition of US states seeking to stop one of the biggest media mergers in recent years.

The temporary restraining order, issued on Monday by Araceli Martínez-Olguín in California, prevents the companies from closing the transaction until at least August 3. On that date, the court will hear arguments on whether to issue a preliminary injunction that could freeze the deal until the antitrust lawsuit is fully resolved.

The ruling follows a lawsuit filed last week by California and 11 other Democratic-led states, which argue the merger would substantially reduce competition across the US film and television industry. The legal action directly challenges the US Justice Department’s June approval of the transaction.

In her order, Judge Martínez-Olguín said the states had made a “strong showing” that the merger could unlawfully reduce competition. She added that allowing the companies to close the deal now could lead to irreversible changes, including workforce reductions and the sharing of competitively sensitive information, before the legality of the merger is decided.

According to the lawsuit, the combined company would control about 27 per cent of the US market for wide-release theatrical film distribution, as well as a similar share of the basic cable licensing business. The states argue that merging two of Hollywood’s five major film distributors would ultimately mean higher prices, fewer choices and less content for consumers.

Welcoming the ruling, Rob Bonta said the temporary restraining order marked “a critical first win” in the effort to stop the merger.

“California and our sister states are fighting for free and fair markets, not rigged markets. America has no kings in government or our economy,” Bonta said.

Letitia James also described the decision as an important victory for those who could be adversely affected by the proposed combination.

Paramount, however, rejected the allegations, maintaining that the merger would strengthen competition rather than weaken it.

A Paramount Skydance spokesperson said the company was confident the evidence would show the states’ antitrust arguments were without merit, adding that the proposed transaction reflects the realities of today’s media landscape.

The merger, approved by the Trump administration on June 12 without requiring any concessions, would create one of the world’s largest entertainment groups, bringing together assets including CNN, Warner Bros. Pictures and the HBO Max streaming platform. The deal is also expected to strengthen Paramount’s ability to compete with streaming giants such as Netflix and legacy media rivals including The Walt Disney Company.

The transaction carries political significance as well. US President Donald Trump has previously indicated he would weigh in on the merger, particularly given the uncertain future of CNN, a network he has frequently criticised.

The acquisition also represents a landmark move for David Ellison, whose bid to build a larger entertainment powerhouse has been backed by financing from his father, Larry Ellison, founder of Oracle.

Beyond the legal uncertainty, the delay could prove costly. Under the merger agreement, if the deal remains incomplete beyond September 30, Paramount Skydance would be required to pay Warner Bros. Discovery shareholders a ticking fee of 25 cents per share, amounting to roughly $7 million for every day of delay.

With the next court hearing scheduled for August 3, the proposed media megamerger now faces a crucial legal hurdle that could determine whether Hollywood’s biggest consolidation in years moves forward or remains stuck in the cutting room floor.