A judge Monday placed a temporary hold on Paramount’s proposed $110 billion takeover of Warner Bros. Discovery.
U.S. District Judge Araceli Martinez-Olguin’s ruling for a temporary restraining order stems from a lawsuit brought by a 12-state coalition led by California arguing the planned merger would violate federal antitrust law.
The order in U.S. District Court for the Northern District of California places a 14-day hold on the case while the court considers a ruling on a full preliminary injunction, which would block the merger for the duration of the litigation. The judge set an Aug. 3 hearing on the matter.
California Attorney General Rob Bonta applauded the judge’s ruling Monday.
“This is a critical first win in our case to ensure this megamerger never sees the light of day,” Bonta said in a statement. “History tells the tale of what happens when a few people have great power over markets that are central to Americans’ lives: fewer opportunities for more people, worse products and services for all people. With our lawsuit, we’re fighting for a free and fair market and a thriving film and television industry that serves creatives and audiences alike. We have a full tank of gas, the law on our side, and look forward to continuing to make our case.”
Paramount did not immediately issue a response.
The court heard arguments Friday but declined to immediately issue a ruling on California’s bid for a temporary freeze on litigation.
The states’ lawsuit, filed July 13, claims that the planned takeover would violate Section 7 of the Clayton Act, which holds that mergers that may substantially lessen competition or tend to create a monopoly are illegal.
Paramount CEO David Ellison is seeking to acquire WBD in a $110 billion deal that was expected to close during the third quarter of this year.
The lawsuit claims the deal would “lead to higher prices, lower quality and less content for film and television, harming movie theaters, basic cable distributors, and ultimately, audiences on every sofa and movie theater seat in the U.S.”
Bonta said the merger — considered one of the biggest media deals in history — would put one company in charge of nearly one-third of all theatrical motion picture and basic cable programming.
The Writers Guild of America sued Tuesday to block the deal on the grounds it violates federal antitrust law and would cause harm to writers.
The guild’s lawsuit, filed jointly in the Northern District by the WGA East and West, alleges Paramount’s pending acquisition of WBD would reduce opportunities, lower pay and worsen working conditions for writers.
The WGA argues that the elimination of a key competitor and the creation of a new dominant firm would result in reduction in the quantity and variety of theatrical films and television series as the merged company would have a greater ability to reduce output.
Furthermore, the complaint asserts that the merger would increase the ability for the few remaining companies to tacitly coordinate to further suppress competition for writers’ work.
“With fewer competitors, the merged Paramount-Warner Bros. entity would have both the incentive and the ability to lower costs by suppressing writers’ wages and reducing output,” according to the complaint. “Writers will be paid less and have fewer employment opportunities.”