Judge Araceli Martinez-Olguin paused the Paramount Warner Bros. Discovery merger today, following arguments from the company and the 12 states challenging the merger.
The order will pause the merger from going forward for 14 days.
The group of 12 states, including California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington, are arguing that the merger would greatly reduce competition, leading to higher prices for consumers and lower quality of content. The group asked the judge for this temporary restraining order to block the merger temporarily and a preliminary injunction that would continue to block it until the judge can consider the antitrust case.
The merger would combine Paramount’s film studio, broadcast networks, and Paramount+ with Warner Bros. Discovery’s extensive film library, cable channels, and HBO Max. The states say that concentrating those assets would limit choices for audiences and reduce incentives for innovation and investment in new content.
“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,” said California Attorney General Rob Bonta. “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.”
Paramount has responded, saying that the merger would strengthen its ability to compete effectively against other streaming services and larger companies. The company has promised high quality content and the creation of more industry jobs.
“The lawsuit filed by the state attorneys general, in the most generous light, reflects a fundamentally flawed application of the antitrust laws and is wrong on both the facts and the law,” Paramount’s representative wrote in a statement following the challenge. “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. Delaying this transaction will only harm entertainment workers who have already suffered over recent years as technology has disrupted their livelihood and cost California tens of thousands of entertainment jobs.”
Paramount wants to have a hearing in late August and a final ruling in September. If the deal has not been finalized by the end of September, Paramount will have to pay Warner Bros. Discovery investors each day that the deal is delayed when a “ticking fee” going into place on October 1. That penalty could cost Paramount millions.