A U.S. federal court has temporarily blocked Paramount’s acquisition of Warner Bros, following a preliminary ruling from Judge Araceli Martinez-Olguin in Oakland. On Monday, a spokesperson for Paramount stated that the company intends to continue defending the deal.
Judge Martinez-Olguin’s ruling indicates that the states involved in the lawsuit have convincingly argued that the merger could lead to illegal restrictions on competition, as reported by Reuters.
A hearing has been scheduled for August 3, where the judge will determine whether the finalization of the transaction should be delayed pending the court proceedings, which could extend for several months.
This legal challenge is the most significant obstacle facing the merger, according to Axios.
New York Attorney General Letitia James commented, “Today’s decision is an important victory for everyone who would suffer as a result of this merger. I look forward to the ongoing fight in this matter,” as quoted by Reuters.
In response to the court’s decision, Warner Bros. Discovery’s shares fell by as much as 4% on Monday afternoon.
Meanwhile, a spokesperson for Paramount reiterated their commitment to defend the agreement, asserting that they are confident the evidence will show that the antitrust claims by state attorneys general lack merit. The representative stated that the defined relevant markets and the allegations regarding the merger’s anticompetitive effects do not hold up in today’s market realities.
Attorney General’s Complaint
The complaint against the proposed merger was filed on July 13 by a coalition of 12 state attorneys general, led by California. The plaintiffs have sought to halt the transaction until the court has reviewed the case, arguing that finalizing the deal would cause irreparable harm to competition. They emphasized that it would create a media giant capable of raising prices within the film and television industry.
Senate Democratic Leader Chuck Schumer praised the court’s decision on social media, stating that “this merger should never have received approval to proceed.” He added that the transaction poses a threat to “press freedom and democracy.”
Schumer argued that the acquisition of WBD by Paramount would be detrimental to entertainment industry workers and American consumers, framing the deal as a “gift to President Donald Trump and his major donors seeking to turn one of our largest news stations into a propaganda tool for the MAGA movement while simultaneously raising streaming costs.” He urged continued support for the state attorneys general in this battle.
The merger received approval from WBD shareholders in April and is set to encompass two major film studios, streaming platforms, and television channels, including CBS, CNN, and the Polish station TVN.
Reporters Without Borders (RSF) warned on Monday that the proposed acquisition could directly threaten the independence of TVN24, calling on the European Commission to condition any potential approval of the merger on guarantees for TVN24.
Documents reveal that if the merger does not proceed by September 30, WBD shareholders will receive an additional 25 cents per share for every quarter of delay. Paramount Skydance has agreed to purchase WBD shares at $31 each, valuing the total transaction at $110 billion.
