Judge pauses Paramount Skydance’s $111 billion Warner Bros. deal

A federal judge has temporarily blocked Paramount Skydance and Warner Bros. Discovery from closing their $111 billion merger or combining operations, giving 12 states an early win in an antitrust challenge to one of the largest media consolidation efforts in years. The order matters for the entertainment business because it keeps two major Hollywood studios and cable-channel owners separate while the court weighs whether the deal would cut competition.

US District Judge Araceli Martínez-Olguín of the Northern District of California issued a temporary restraining order that runs for 14 days. The order can be extended if the court needs more time, and it can be replaced by a preliminary injunction that would keep the transaction on hold until the case is decided.

California is leading the state coalition, which sued last week after the Trump administration approved the transaction. The states argue the merger would combine two of the five major Hollywood movie studios and two of the five major owners of basic cable television channels, leaving fewer independent buyers, sellers and distributors in core entertainment markets.

California Attorney General Rob Bonta said his office and other state attorneys general had obtained an emergency order against what he called an unlawful merger. Bonta described the ruling as an initial victory in the states’ effort to stop the deal.

Market concentration drives the order

Martínez-Olguín wrote that the states had made a strong showing that the transaction would substantially reduce competition in theatrical films. The order says the combined company is expected to control 27% of the wide-release theatrical distribution market.

That figure is below the 30% share that courts have treated as presumptively problematic in prior merger cases, but the judge said 30% is not a floor for antitrust concern. She also cited the expected increase in the Herfindahl-Hirschman Index, a standard concentration measure used in merger analysis, and found that the jump was high enough to support the states’ argument that the deal would increase market power.

For a temporary restraining order, the states had to show they were likely to succeed, that harm would occur without immediate court action, and that an order would serve the public interest. The judge found the balance favored the states, pointing to possible public harm from reduced competition.

The order also says Paramount Skydance and Warner Bros. Discovery did not show near-term harm from a delay. According to the court, the companies conceded they would not begin incurring carrying costs tied to a delayed merger until the end of September 2026.

The next phase is already scheduled. Martínez-Olguín set briefing deadlines and scheduled an August 3 hearing on whether to issue a preliminary injunction. If the court keeps the deal blocked beyond the temporary order, Paramount can challenge the ruling at the US Court of Appeals for the 9th Circuit.

The ruling does not decide whether the merger violates antitrust law. It does, however, prevent the companies from closing while the states press a case that directly tests whether federal approval is enough to carry a large media deal through state-level antitrust opposition.

This story draws on original reporting from Ars Technica.