Judge delays merger between Paramount and Warner Bros.

By Chris Woodward
The Center Square

A federal judge Monday granted a temporary restraining order halting the $110 billion merger between Warner Bros. Discovery Inc. and Paramount Skydance Corp.

A coalition of Democratic attorneys generals from 12 states, including California and Arizona, asked for the TRO. This came after they filed a lawsuit last week to stop Paramount Skydance’s acquisition of Warner Bros. Discovery.

The attorneys general claim the merger violates Section VII of the Clayton Act by attempting to combine two of Hollywood’s biggest film distributors and basic cable network owners. If the merger were to happen, the attorneys general warn that will lead to higher consumer prices, reduced variety, volume, and quality of film and television content, as well as reduced negotiating leverage for cable and theater distributors.

Paramount Skydance owns Paramount Pictures’ TV and movie studios in Hollywood, and Warner Bros. Discovery has its TV and movie studios in nearby Burbank. In addition to TV networks, each company owns streaming services, and Paramount Skydance’s assets include CBS.

The TRO was granted by Judge Araceli Martínez-Olguín of U.S. District Court for the Northern District of California. Her order pauses the deal while the court considers a preliminary injunction that would block the merger for the duration of the litigation.

Arguments over the preliminary injunction are scheduled for an Aug. 3 hearing in Martínez-Olguín’s courtroom in Oakland, according to California Attorney General Rob Bonta’s office. Bonta is leading the coalition of plaintiffs in the lawsuit.

Bonta called the TRO a critical first step in the coalition’s efforts to ensure the merger does not happen.

“Consolidation in the film and television industry not only leads to higher prices, it also leads to fewer opportunities for important stories to come to life, and fewer ways for audiences to encounter stories, ideas and perspectives beyond their own experiences,” said Bonta in a video posted on X. “With our lawsuit, we’re fighting for a free and fair market and a thriving film and television industry that serves creatives and audiences alike.”

In Arizona, Attorney General Kris Mayes said she was grateful for the TRO and noted the merger’s impact would go beyond California.

“This merger violates federal law and will drive up prices for Arizonans and could lead to job losses across our state,” she said in a news release.

The Center Square sought comment from Warner Bros. Discovery and Paramount Skydance, but did not hear back by publication time.

On July 17, during a hearing over the TRO, the companies argued that the states had not made their case.

“We do not think they should get a TRO,” said Jeffrey Kessler, the attorney hired by Paramount to defend its acquisition of Warner Bros. Discovery.

A separate lawsuit has also been filed by the Writers Guild of America. That too seeks to block the merger.

Meanwhile, Wayne Winegarden, senior fellow in business and economics at Pasadena, Calif.-based Pacific Research Institute, said the lawsuits do more harm than good and could leave Warner Bros. and Paramount as unviable, uncompetitive standalone entities.

“This ruling does not change the merger’s underlying economics nor the troubling precedent this lawsuit sets,” Winegarden said, answering The Center Square’s questions by email on Monday. “At the end of the day, this is a case of two companies in a struggling market trying to stay in business.”

Besides California and Arizona, the coalition suing to stop the merger includes Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.