Paramount and Warner Bros. merger hit with temporary restraining order

Paramount Skydance‘s proposed acquisition of Warner Bros. Discovery hit its first official roadblock when a judge granted a temporary restraining order on the merger as part of a lawsuit brought by state attorneys general.

California District Judge Araceli Martínez-Olguín signed off on the order Monday after hearing arguments from both sides in an Oakland courtroom on Friday. The order puts a 14-day pause on anything moving forward with the merger.

Last week, a group of state attorneys general led by California’s Rob Bonta filed a lawsuit seeking to block the $110 billion acquisition due to antitrust concerns. The proposed deal would unite the storied film studios of Paramount and Warner Bros, the CBS broadcast network, a sprawling portfolio of pay TV networks that includes CNN, TNT, MTV and BET, and streaming services Paramount+ and HBO Max, under one roof.

In a statement on Monday, a Paramount spokesperson said the company it is “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.”  

“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,” according to the statement.

Warner Bros. declined to comment.

The lawsuit said that the proposed deal would violate the Clayton Antitrust Act — a more than 100-year-old law that prohibits anticompetitive mergers and acquisitions. The lawsuit was brought by a group of states that also includes Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.

In Monday’s order, Martínez-Olguín said the coalition of state attorneys general presented “compelling evidence that the combined firm resulting from the transaction will possess substantial market share in the wide-release theatrical distribution market.”

Paramount’s lead trial counsel Jeffrey Kessler said on CNBC earlier this week that the TRO was filed after Paramount indicated its intention was to close the deal as early as July 22, when the company expects to have all regulatory clearances.

During Friday’s hearing, Paramount attorneys offered to delay the deal closing until mid-August to sidestep a temporary restraining order.

In Monday’s statement, Paramount said it was “grateful for the court’s swift order,” adding that similar to its offer to delay the deal during Friday’s hearing, the order “preserves the status quo while the Court considers the antitrust issues presented.”

Still, the states could seek another temporary restraining order after the 14 days, or a preliminary injunction, which would further delay the deal.

Another proposed media deal — the $6.2 billion tie up of broadcast station group owners Nexstar Media Group…