A federal judge has temporarily blocked the proposed $110 billion merger between Warner Bros. Discovery and Paramount, determining that the combination of the two megacorporations would violate antitrust laws.
U.S. District Judge Araceli Martínez-Olguín issued a 14-day restraining order on the transaction Monday. Martínez-Olguín ruled that the two companies should not be allowed to finalize the deal, agreeing with a 12-state coalition (led by California) that merging the media behemoths would result in higher consumer prices, produce fewer movies and TV shows, and ultimately “substantially lessen competition.”
“Plaintiff States’ showing at least demonstrates that serious questions going to the merits remain, weighing in favor of preliminary injunctive relief,” the judge wrote.
“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,” Martínez-Olguín continued. “The balance of equities, combined with the public’s vital interest in antitrust enforcement, therefore tips sharply in favor of the requested injunctive relief.”
Paramount disagreed with the judge’s determination. “We will vigorously defend the transaction and demonstrate that this challenge is inconsistent with sound competition policy and the competitive realities of the media marketplace,” Paramount said in a statement.
California Attorney General Rob Bonta praised the decision, describing it as a “critical first win in our case to ensure this megamerger never sees the light of day.”
“History tells the tale of what happens when a few people have great power over markets that are central to Americans’ lives: fewer opportunities for more people, worse products and services for all people,” Bonta said in a statement shortly after the ruling was announced. “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. We have a full tank of gas, the law on our side, and look forward to continuing to make our case.”
The merger would have fused two gargantuan film studios, two streaming platforms, and two news organizations under the helm of David Ellison, the millennial son of tech billionaire Larry Ellison, who’s a close friend of Donald Trump.
The decision has put Paramount executives in a bind: the company placed a bet against time, promising Warner Bros. shareholders 25 cents a share each quarter if the deal isn’t wrapped by September 30. That could potentially penalize Paramount by more than $600 million per quarter.
The gamble may have seemed less perilous earlier this year, when the younger Ellison was courting Trump while his administration weighed whether or not to approve the merger at the federal level. Ellison hosted a much-critized private dinner “honoring the Trump White House” on April 23. Trump attended, as did Secretary of State Marco Rubio, deputy White House chief of staff Stephen Miller, Defense Secretary Pete Hegseth, and acting Attorney General Todd Blanche.
Seven weeks later, the Justice Department’s antitrust division granted regulatory clearance by closing its investigation into the merger.
The younger Ellison transitioned from a major Hollywood producer to a media mogul almost overnight last year when his company Skydance merged with Paramount in a deal predicated on an $8 billion investment. The deal made Ellison chairman and CEO of a combined entity that owns the CBS network, MTV, Nickelodeon, BET, Comedy Central, Paramount Pictures, Skydance Animation, and more.
Paramount Skydance came to an agreement to acquire Warner Bros. Discovery earlier this year when it undermined a previous deal between Warner Bros. and Netflix by offering an all-cash bid to buy the company with $31 per share.
The deal would have also granted Ellison control of CNN, TBS, TNT, HBO, Cinemax, Discovery, HGTV, and more.
This story has been updated.
