The proposed acquisition of Warner Bros. Discovery (WBD) from Paramount Skydance found itself in traffic after a judge temporarily paused the deal in response to a lawsuit filed by a coalition of 12 attorneys general who argue the merger would harm competition.
U.S. District Judge Araceli Martínez-Olguín issued a 14-day stay on Monday after hearing arguments from both sides last week. The coalition, led by California Attorney General Rob Bonda, could seek another stay after the 14 days, further delaying the merger.
The states’ lawsuit alleges the deal would hurt movie theaters, basic cable distributors and the public. They argue that if the two companies are allowed to merge, it will reduce competition in three areas: wide-release theatrical distribution, “high-gross” theatrical distribution and basic cable licensing.
“This is a critical first victory in our case to ensure that this megamerger never sees the light of day,” Attorney General Bonta said in a statement. “History tells the story of what happens when a few people have too much power in markets that are central to American lives: fewer opportunities for more people, worse products and services for all people. With our lawsuit, we fight for a free and fair market and a thriving film and television industry that serves creatives and audiences.
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, combining Paramount’s CBS and MTV with WBD’s CNN and HBO.
“We are confident that the evidence will show that the state AGs’ antitrust arguments are without merit, as their purported markets and claims of anticompetitive effects have no basis in modern market reality,” a Paramount spokesperson said in a statement to TechCrunch. “This merger is legal, pro-competitive and will benefit consumers, creators, employees and the entertainment industry. We will continue to vigorously defend the transaction and look forward to hearings on the merits 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 hurdle has the potential to derail Paramount’s efforts to become a major competitor to the likes of Netflix.
The proposed acquisition has received control by filmmakers, actors and industry professionals who argued that the deal would reduce competition and further consolidate the US media industry.
WBD did not immediately respond to TechCrunch’s requests for comment.
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