A US federal judge has temporarily blocked the $110 billion Paramount Warner Bros merger, ordering the two media companies to remain separate while 12 states pursue an antitrust lawsuit against the takeover.
US District Judge Araceli Martínez-Olguín issued a 14-day temporary restraining order on July 20, preventing Paramount Skydance from completing its acquisition of Warner Bros. Discovery or beginning to combine the companies’ operations.
A hearing scheduled for August 3 will determine whether the pause should be extended while the wider antitrust case proceeds. The ruling does not permanently prevent the acquisition, but it represents the deal’s most significant legal obstacle so far.
Twelve States Challenge the Merger
The order followed a lawsuit filed by California and 11 other states, including New York, Washington, Massachusetts, Arizona and Oregon.
The states argue that bringing Paramount Pictures and Warner Bros. Pictures under the same company would reduce competition in film distribution. They have also raised concerns about the combined group’s influence over cable television, streaming services and negotiations with cinemas and television providers.
According to the lawsuit, the merged company could control approximately 27 percent of the US market for distributing films released widely in cinemas. The states claim that this concentration could lead to higher prices, fewer choices and reduced investment in new productions.
The judge concluded that allowing the acquisition to close before the case was heard could cause changes that would be difficult to reverse. These could include layoffs, the consolidation of operations and the exchange of confidential business information between companies that currently compete against each other.
Paramount Says the Market Has Changed
Paramount rejects the states’ argument and maintains that the merger would create a stronger competitor to Netflix, Disney, Amazon and Apple.
The company says traditional definitions of the Hollywood studio market no longer reflect an industry increasingly shaped by global streaming platforms and technology companies. Paramount has also pointed to Amazon and Apple’s expansion into theatrical film production and distribution.
The court, however, found that the growing presence of technology companies was not enough at this stage to dismiss concerns about combining two of Hollywood’s largest studios.
The proposed company would control a broad collection of entertainment and news assets, including Warner Bros. Pictures, Paramount Pictures, HBO, CBS, CNN, Showtime, Paramount+ and HBO Max.
The Deal Followed a Battle With Netflix
Paramount’s acquisition agreement values Warner Bros. Discovery at $81 billion in equity and approximately $110 billion when debt is included. Paramount agreed to pay shareholders $31 in cash for each Warner Bros. Discovery share.
The agreement emerged after a prolonged bidding battle involving Netflix. Warner Bros. Discovery had previously entered into a merger agreement with Netflix, but Paramount later increased its offer.
Netflix declined to raise its bid after the Warner Bros. Discovery board determined that Paramount’s revised proposal represented a superior offer. That decision cleared the way for the Paramount agreement announced in February 2026.
The US Justice Department subsequently allowed the transaction to proceed following its federal antitrust review. The lawsuit brought by the states created a separate legal challenge that could continue even after the federal review ended.
Delays Could Cost Paramount Millions
The temporary order also increases the financial pressure on Paramount.
Under the merger agreement, additional payments to Warner Bros. Discovery shareholders will begin accumulating if the acquisition has not closed by September 30. The arrangement is estimated to cost Paramount approximately $7 million for every day the transaction remains unfinished after that deadline.
Paramount has also agreed to pay a $7 billion termination fee if regulatory barriers ultimately prevent the acquisition from closing.
The August 3 hearing will now become a critical point in the takeover. If the judge grants a preliminary injunction, Paramount and Warner Bros. could be required to remain separate throughout an antitrust case that may continue for months.
For now, the $110 billion acquisition remains alive. Its completion will depend on whether Paramount can convince the court that combining two major Hollywood studios would strengthen competition rather than reduce it.