Judge pauses $81bn Paramount-Warner deal as states sue
A federal restraining order has frozen the $81 billion Paramount-Warner merger for two weeks, threatening the deal's timeline and exposing the company to millions in daily delay fees amid a bitter clash between state and federal regulators.
A federal judge on Monday granted a temporary restraining order to halt the $81 billion Paramount-Warner Bros. Discovery merger for at least two weeks. The ruling, issued by District Judge Araceli Martínez-Olguín, comes after a coalition of 12 states sued to block the transaction, creating a major regulatory roadblock for the combined media giant.
The 14-day freeze, which could extend to 28 days, places immediate financial pressure on Paramount. The company faces a ticking fee of approximately $7 million per day if the deal is not closed by Sept. 30. Missing that deadline would trigger heavy penalties, meaning a prolonged legal battle could rapidly erode shareholder value in a transaction valued at nearly $111 billion including debt.
The states, led by California, have proposed a trial schedule starting in April 2027 to allow for proper discovery. Paramount had pushed to wrap up a preliminary injunction hearing by late August to preserve time for a potential appeal before the September deadline.
Unlike the federal government, which recently approved the deal, the state prosecutors are not focused on the streaming market. Their complaint centers on theatrical film distribution and basic cable programming, arguing a combined entity would control nearly a third of those markets and create a "media behemoth" capable of raising prices and suppressing wages.
Paramount has pushed back by pointing to blockbuster hits from studios outside the traditional "big five," such as A24 and Amazon’s MGM. California Attorney General Rob Bonta countered that Monday's order is a “critical first win in our case to ensure this megamerger never sees the light of day.” Paramount maintains the states’ antitrust arguments “are without merit” and that the merger is necessary to compete with larger rivals like Netflix.
The legal clash highlights a stark divide between state and federal regulatory postures. New York Attorney General Letitia James called it a “political merger,” while Paramount points to clearances already secured in China, Canada, and Australia. Reviews in the European Union and the U.K. remain ongoing.
Domestically, the Writers Guild of America has filed its own lawsuit to block the transaction. Paramount also faces a shareholder lawsuit alleging the company promised “illegal, private benefits” to President Donald Trump to secure federal approval, accusations the company has repeatedly dismissed.
