Merger deal between Paramount and Warner Bros paused by judge

A US federal judge has temporarily blocked the proposed $110bn (£85bn) merger between media giants Paramount Skydance and Warner Bros Discovery.

The decision follows a lawsuit brought by a coalition of 12 US states, including California and New York, aiming to halt the deal over concerns it would stifle competition and raise consumer prices.

Prosecutors representing the states said merging two major studios would cause “substantial harm on movie theatres, basic cable distributors, and, ultimately, audiences nationwide”.

In response, the media giants argued that the states had misread the market and that merging would improve streaming efficiency.

US district judge Araceli Martínez-Olguín issued the temporary restraining order on Monday following legals arguments heard last week.

Under the 14-day injunction, neither company can finalise the deal or start joining the businesses together.

In her ruling, the judge noted that the state coalition raised “serious questions” regarding the deal’s impact on movie distribution.

She warned that allowing the merger to proceed now would make it “extraordinarily difficult to unscramble the egg” if the court decided later to block it all together.

Judge Martínez-Olguín also pushed back against the companies’ arguments, highlighting that “public’s vital interest in antitrust enforcement” outweighed any temporary delay to the merger.

She said that Paramount and Warner Bros “will continue to operate as separate, viable companies competing in the marketplace” while legal proceedings continue.

Combining Paramount and Warner Bros would end a century of fierce rivalry between two of Hollywood’s biggest hitmakers.

Between them, they own legendary franchises like Harry Potter, Batman, Mission: Impossible, and Top Gun, as well as TV channels CNN, MTV and Nickelodeon.

If the deal does end up going ahead, the new company would account for over a quarter of major film releases.

The decision delivers a sharp temporary blow to both media giants as they seek to navigate an increasingly tough streaming landscape.

The next court hearing dates have been set for August.