Paramount-Warner Bros. Merger Delayed By Federal Judge

Paramount Skydance’s proposed acquisition of Warner Bros. Discovery has been temporarily halted by a federal judge, extending the uncertainty surrounding the $110 billion deal.

U.S. District Judge Araceli Martínez-Olguín issued a 14-day restraining order on Monday, preventing the companies from completing the transaction before an August 3 hearing. The ruling came in response to an antitrust lawsuit filed by California and 11 other states seeking to block the merger.

The states argue that combining two of Hollywood’s largest studios would reduce competition, raise prices, and result in fewer jobs and less content. Their complaint estimates that the merged company would control 27% of the domestic market for widely released films.

According to Business Insider, employees at both companies are increasingly anxious about the outcome. Many expect overlapping teams to be consolidated if the transaction closes, almost assuredly triggering another major round of layoffs. Some Paramount workers, however, reportedly fear the company could face deeper financial problems if the acquisition collapses.

The temporary order does not kill the merger, which has already received approval from the Trump administration’s Department of Justice. At the August 3 hearing, the judge will consider whether to extend the delay while the states’ lawsuit proceeds.

The timing could prove costly for Paramount CEO David Ellison. Under the acquisition agreement, Paramount must pay Warner Bros. Discovery shareholders approximately $7 million for each day the deal remains unfinished after September 30. The company could also owe a $7 billion breakup fee if the transaction fails.