Paramount Skydance’s proposed acquisition of Warner Bros. Discovery has hit a roadblock after a judge temporarily paused the deal in response to a lawsuit filed by a coalition of 12 state attorneys general who argue that the merger would harm competition.
U.S. District Judge Araceli Martínez-Olguín issued a 14-day pause on Monday after hearing arguments from both sides last week. The coalition, which is being led by California Attorney General Rob Bonta, could seek another pause after the 14 days, further delaying the merger.
The lawsuit from the states alleges that the deal would harm movie theaters, basic cable distributors, and audiences. They argue that if the two companies are allowed to merge, it would lessen competition in three areas: wide release theatrical film distribution, “top-grossing” theatrical distribution, and basic cable licensing.
“This is a critical first win in our case to ensure this megamerger never sees the light of day,” said Attorney General Bonta in a statement. “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. 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 deal would combine two notable film studios as well as streaming platforms Paramount+ and HBO Max. It would also create one of the largest portfolios of television networks, bringing together Paramount’s CBS and MTV with WBD’s CNN and HBO.
“We are confident the evidence will demonstrate that the State AGs’ antitrust arguments are without merit as their alleged markets and claims of anticompetitive effects are without any basis in modern market realities,” a spokesperosn for Paramount said in a statement to TechCrunch. “This merger is lawful, pro-competitive, and will benefit consumers, creators, workers, and the entertainment industry. We will continue to vigorously defend the transaction and will look forward to the hearings on the substance of the State AGs’ action.”
Paramount CEO David Ellison had said in May that the transaction was on track to close by September. The legal roadblock has the potential to derail Paramount’s efforts to transform into a major competitor to companies like Netflix.
The proposed acquisition has received scrutiny from filmmakers, actors, and industry professionals who argued that the deal would reduce competition and further consolidate the U.S. media industry.
WBD did not immediately respond to TechCrunch’s requests for comment.
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