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A federal judge on Monday granted a temporary restraining order halting the proposed $110 billion merger between Paramount and Warner Bros. Discovery, accepting a request from a coalition of 12 state attorneys general who argue the deal would violate antitrust law and harm consumers.
Judge Araceli Martínez-Olguín of the Northern District of California issued the order after hearing arguments from both sides on Friday in Oakland. The temporary restraining order will block the companies from closing the merger for at least two weeks, with the potential to extend for two additional weeks. During the hearing, the judge suggested that Paramount had effectively conceded it would not be harmed by a temporary pause, noting the company had offered to delay closing for up to 30 days.
The 12-state coalition, led by California Attorney General Rob Bonta, alleges that the merger violates the Clayton Antitrust Act by substantially lessening competition in three distinct markets: wide-release theatrical distribution, “top-grossing” theatrical distribution, and basic cable licensing. The states argue that the combined company would control nearly one-third of films distributed widely and approximately one-third of basic cable programming, giving it excessive leverage over movie theaters and cable distributors.
The lawsuit represents the most significant legal obstacle to the deal despite approvals from the U.S. Department of Justice and international regulators in countries including Australia, China, Canada, and others. Paramount has emphasized that it has already received all necessary governmental clearances, casting the state-level challenge as a sharp political reversal.
The timing of the merger has become critical for Paramount. The deal includes a “ticking fee” structure that requires Paramount to pay Warner Bros. shareholders 25 cents per share per quarter if the transaction does not close by September 30, translating to approximately $7 million per day. This financial pressure has driven Paramount’s efforts to accelerate the process, with the company originally planning to close as early as July 22 before the states filed their lawsuit on July 13.
Judge Martínez-Olguín scheduled a hearing on August 3 to consider the states’ request for a preliminary injunction, which could freeze the merger indefinitely pending a final ruling on the merits. Such an injunction would prove far more damaging to Paramount’s timeline than the temporary restraining order. In antitrust litigation, a preliminary injunction is often decisive—if granted, deals typically fall apart before trial; if denied, they generally proceed to completion.
Paramount has vigorously contested the states’ claims, characterizing the lawsuit as “one of the weakest merger challenges in modern antitrust history.” The company argues that the theatrical market has become more competitive with the success of new entrants like A24 and Amazon MGM Studios. Paramount also maintains that the basic cable market is in decline due to cord-cutting, diminishing the competitive concerns the states raise. The company has committed to producing at least 30 theatrical films annually through the merged entity.
During Friday’s arguments, Paramount’s lead counsel, Jeffrey Kessler, emphasized these competitive realities, while James Weingarten, arguing for the states, countered that the five major studios—Paramount, Warner Bros., Disney, Sony, and Universal—have maintained consistent market dominance for 10-15 years. He noted that the market remains dominated by incumbent players and that even films from technology companies like Apple are typically distributed by established studios like Warner Bros.
The states point out that merging two of the industry’s largest players would concentrate power in an already consolidated industry. They argue this would lead to higher prices and reduced content output, ultimately harming consumers. The coalition includes attorneys general from Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington, alongside California.
The merger has drawn additional opposition beyond the state lawsuit. The Writers Guild of America filed its own antitrust challenge, arguing the deal would suppress members’ wages and reduce available jobs. A consumer group also filed suit, focusing on concerns about combining Paramount+ and HBO Max. Meanwhile, the British culture secretary has indicated she is “minded to intervene” in the deal, with decisions from both the United Kingdom and the European Union expected by early August.
Paramount owns a 114-year-old film studio, the Paramount+ streaming service, the CBS broadcast network, and cable networks including MTV and Nickelodeon. Warner Bros. operates a 116-year-old film studio alongside CNN, HBO, TNT, and streaming services HBO Max and Discovery+. Under the transaction terms, Paramount would pay $31 per share in cash for all outstanding Warner Bros. shares.
The judge indicated she would move quickly to consider the preliminary injunction request, with the August 3 hearing positioned as an expedited process. Paramount has requested live witness testimony and hopes for a ruling by early September, allowing potentially months of litigation before the critical September 30 deadline. The states have proposed a more leisurely schedule extending into 2027, seeking time to gather more comprehensive evidence.