A federal judge has temporarily stopped Paramount from closing its planned $110 billion acquisition of Warner Bros. Discovery, giving a group of state attorneys general a short win in their antitrust challenge. For Paramount, the delay is not just procedural pain. If the deal is still unfinished after September 30, the company will begin owing Warner Bros. investors millions of dollars a day.
US District Judge Araceli Martínez-Olguín partially granted the states’ request for a temporary restraining order, according to reports from Variety and Reuters. The order lasts 14 days, and the court set an August 3 hearing on whether to issue a preliminary injunction.
The states had asked the court to pause the merger for 28 days. Martínez-Olguín did not give them the full delay they wanted, but she accepted enough of their argument to stop the companies from closing while the court considers the next step.
In her order, Martínez-Olguín said the combined company’s market share supported a presumption that the merger could run afoul of antitrust law. She wrote that “the Court is persuaded that it can presume the proposed merger is likely to violate antitrust laws,” according to The Verge’s account of the order. She also found that the states had shown that “irreparable harm” could happen without temporary relief.
What the states argued
The lawsuit was brought by attorneys general from California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington. The states argued that the combined company would become a “media behemoth” and damage competition.
Their concern was not limited to what the merged company might look like after regulators or courts finished reviewing it. The states said that allowing the deal to close now could let Paramount and Warner Bros. Discovery take steps that would be difficult to unwind later, including layoffs and sharing information between the two businesses.
That is the practical point of a temporary restraining order in a merger fight. Once two companies close a deal, they can start integrating operations, cutting jobs, and exchanging competitively sensitive information. A later court order can tell companies to separate, but it cannot easily un-fire people or make executives forget what they learned.
The clock is now part of the case
The court’s pause gives the states time to press for a preliminary injunction, but it also puts pressure on Paramount. The company faces a deadline of September 30 before daily payments to Warner Bros. investors begin, according to the reported merger terms.
The next key date is August 3. At that hearing, the court will consider whether the short pause should become a longer block while the antitrust challenge proceeds.
This story draws on original reporting from The Verge.
