Paramount WBD merger paused for 14 days by antitrust order

The Paramount WBD merger is on hold for 14 days after a federal judge granted a temporary restraining order in an antitrust lawsuit brought by state attorneys general, CNBC reported.

U.S. District Judge Araceli Martínez-Olguín in California approved the order Monday after hearing arguments Friday in Oakland. The order temporarily stops the proposed $110 billion acquisition from advancing while the court weighs the states’ challenge.

The lawsuit was filed by a coalition led by California Attorney General Rob Bonta. The states argue the deal would violate the Clayton Antitrust Act, the federal law that bars mergers and acquisitions that may harm competition.

Why was the Paramount WBD merger paused?

The states say the combined company would hold too much power in entertainment markets, including wide-release movie distribution and basic cable programming. In her order, Martínez-Olguín said the attorneys general had shown compelling evidence that the merged business would have substantial market share in wide-release theatrical distribution, according to CNBC.

The proposed deal would put Paramount, Warner Bros., CBS, CNN, TNT, MTV, BET, Paramount+ and HBO Max under one corporate roof. The lawsuit was brought by California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.

Bonta has called the merger unlawful and said it would lead to higher prices, lower quality and less film and television content, harming theaters, basic cable distributors and audiences. The states say the merged company would control nearly one-third of films and nearly a third of basic cable TV programming, CNBC reported.

A temporary restraining order is a short-term court order that preserves the current situation while a judge considers a legal challenge. The states could ask for another temporary order after the 14-day pause, or seek a preliminary injunction that would keep the deal delayed for longer.

What Paramount and Warner Bros. Discovery say

Paramount has defended the transaction and said in a Monday statement that it believes the evidence will show the states’ antitrust arguments lack merit. The company called the deal lawful and pro-competitive, and said it would benefit consumers, creators, workers and the entertainment industry.

Paramount also said it was grateful for the court’s quick order, because it keeps the status quo while the antitrust issues are considered. During Friday’s hearing, Paramount’s lawyers offered to delay closing until mid-August to avoid a temporary restraining order, CNBC reported.

Warner Bros. Discovery declined to comment.

Paramount’s lead trial counsel, Jeffrey Kessler, said on CNBC last week that the temporary restraining order request came after Paramount indicated it could close the transaction as soon as July 22, when it expected all regulatory clearances.

What happens next for the deal?

The transaction has already cleared the Antitrust Division of the U.S. Department of Justice, which approved it in June, and it has received approval in several global jurisdictions. The European Union and the U.K. have also been reviewing the deal and set a provisional July 22 deadline, CNBC reported.

Paramount has said it remains on track to close by the end of September. If the deal slips past Sept. 30, the company could owe Warner Bros. Discovery shareholders an additional 25 cents per share each quarter until closing, a ticking fee CNBC said would equal about $650 million in cash value per quarter.

Paramount also agreed to a $7 billion breakup fee if the transaction fails because of regulatory concerns.

The court fight echoes another media merger challenge. A proposed $6.2 billion deal between Nexstar Media Group and Tegna has also been paused after a lawsuit and preliminary injunction led by Bonta, with a trial scheduled for mid-2027, CNBC reported.

This story draws on original reporting from CNBC.