Paramount Skydance’s proposed acquisition of Warner Bros. Discovery (WBD) has been halted after a U.S. District Judge temporarily paused the deal due to a lawsuit from a coalition of 12 state attorneys general. The judge, Araceli Martínez-Olguín, issued a 14-day pause following hearings held last week.
The coalition, led by California Attorney General Rob Bonta, claims that the merger would negatively impact competition in movie theaters, cable distribution, and audiences. The lawsuit specifically alleges the deal would lessen competition in wide-release theatrical film distribution and basic cable licensing.
Bonta stated, “This is a critical first win in our case to ensure this megamerger never sees the light of day.” He emphasized the need for a free and fair market, warning of the potential consequences of concentrated power over central markets.
The merger seeks to combine Paramount’s and WBD’s film studios as well as their streaming services, Paramount+ and HBO Max, forming a significant portfolio that includes networks like CBS, MTV, CNN, and HBO.
A Paramount spokesperson countered that the antitrust claims are without merit, arguing that the merger is pro-competitive and will benefit consumers and the industry. “We are confident the evidence will demonstrate that the State AGs’ antitrust arguments are without merit,” the spokesperson indicated.
Paramount CEO David Ellison previously projected that the deal would close by September, but the current legal challenges could impact the company’s efforts to compete with Netflix. The acquisition has faced criticism from various industry stakeholders concerned about reduced competition and increased consolidation within the media sector.
WBD has not responded to requests for comment regarding the ongoing lawsuit.
