A federal judge today ordered Paramount Skydance and Warner Bros. Discovery to halt their $111 billion merger, handing an early win to 12 states that sued to block the deal. The ruling granted a temporary restraining order (TRO) prohibiting the firms from completing the merger and from consolidating their operations.
The temporary order is in effect for 14 days, but it can be converted into a preliminary injunction that would prevent the merger from being completed until the case is fully resolved. This legal move comes after the deal had previously received approval from the Trump administration.
Presumption of Illegality
US District Judge Araceli Martínez-Olguín wrote in today’s order that the states, led by California, made a "strong showing that the Transaction will substantially lessen competition" in the theatrical-film market. The judge noted that the merged entity is expected to hold a 27 percent share of the wide-release theatrical distribution market.
The ruling also highlighted a sharp rise in market concentration as measured by the Herfindahl-Hirschman Index (HHI). The judge stated that when plaintiffs demonstrate a presumption of illegality through market concentration, they do not need to provide elaborate proof of specific anticompetitive effects to obtain an initial restraining order.
Public Interest vs. Corporate Costs
In her decision, Martínez-Olguín emphasized that the merger poses potential harms to the public interest that outweigh the concerns of the corporations. The order noted that the defendants conceded they would not incur carrying costs for a delayed merger until the end of September 2026, meaning they suffer no immediate economic harm from the pause.
“Even if Defendants argued that they would suffer economic harm as a result of delaying the merger, the equities do not weigh in their favor when contrasted with the potential public harms,” the judge wrote. A hearing on a preliminary injunction is scheduled for August 3. Paramount has the option to challenge these rulings in the US Court of Appeals for the 9th Circuit.
