State AGs Seek Temporary Restraining Order To Pause Paramount-WB Merger

State attorneys general are now seeking a temporary restraining order and preliminary injunction to pause Paramount‘s proposed merger with Warner Bros. Discovery, warning that the company may otherwise close the transaction as soon as July 22.

That date is around the time that the European Union is expected to issue its decision on the transaction, with the U.S. Justice Department having already cleared the deal.

The motion for a temporary restraining order was filed in federal court in Sacramento late on Monday. If granted, the TRO would temporarily pause the transaction as the legal proceedings take place.

In their lawsuit filed earlier in the day, California Attorney General Rob Bonta and 11 other state attorneys general argued that the merger would give Paramount leverage to harm competition for wide release theatrical distribution, anticipated top grossing film releasing, and basic cable channel licensing.

In their motion, the states argued that they have met the threshold for a TRO and preliminary injunction, including the risk of irreparable harm without swift court action and that they had a likelihood of success on the merits.

The state AGs wrote that the merger “will increase market concentration to presumptively unlawful levels in three relevant antitrust markets. Once consummated, layoffs, content cancellations, and harms to competition would commence immediately. If the Court subsequently determines that the Transaction is unlawful, it will then be ‘extraordinarily difficult to unscramble the egg’ and ‘too late to preserve competition if no preliminary injunction has issued.’” 

Paramount responded to the lawsuit with a statement saying that it “reflects a fundamentally flawed application of the antitrust laws and is wrong on both the facts and the law.”

“We will vigorously defend the transaction and demonstrate that this challenge is inconsistent with sound competition policy and the competitive realities of the media marketplace. Delaying this transaction will only harm entertainment workers who have already suffered over recent years as technology has disrupted their livelihood and cost California tens of thousands of entertainment jobs.”

Per court documents, among those representing Paramount in the proceedings is Daniel Petrocelli, the litigator who successfully fought a federal antitrust challenge to AT&T’s acquisition of Warner Bros. in 2018. That case was brought by Makan Delrahim, then antitrust chief at the DOJ who is now chief legal officer for Paramount.

In the motion for a TRO, the AGs said that Paramount declined to pause the merger until the court ruled on the merits. The AGs also argued that there would be “no cognizable harm” to Paramount or Warner Bros. to a pause as the case is adjudicated.

The AGs wrote, “The merger agreement sets an outside date of March 4, 2027, which automatically extends to June 4, 2027 if antitrust review is still pending. The agreement also imposes a $7 million daily ticking fee on Paramount beginning September 30, 2026. The Defendants thus agreed to an outside date that contemplates more than eight months of accumulated ticking fees as part of the price of completing a transaction that might face antitrust scrutiny. Paramount’s interest in completing the Transaction now to spare it the costs of its own agreement is not a cognizable equity interest.”

Bonta was among the state AGs who won a temporary restraining order and preliminary injunction that has paused Nexstar’s proposed merger with Tegna, creating a broadcast station powerhouse. The case is on appeal, but the companies have to remain separate as the legal fight proceeds.