According to Deadline, a federal judge has granted a temporary restraining order that will halt the merger of Paramount and Warner Bros. Discovery for 14 days.

The order comes after 12 U.S. states formed a coalition to try to block the sale of Warner Bros. Discovery to Paramount, a deal valued at approximately $110 billion. After filing a lawsuit to halt the merger, the attorneys general requested a temporary restraining order and a preliminary injunction to suspend the transaction before it is finalized.

In a statement, U.S. District Judge Araceli Martinez-Olguin asserted that state attorneys general had presented “compelling evidence” that the company resulting from the merger between Paramount and Warner Bros. Discovery would hold a significant market share in the distribution of major film releases.

According to the judge, the concentration of the two companies' operations raises concerns regarding U.S. antitrust laws: “On this combined firm market share alone, the Court is persuaded that it can presume the proposed merger is likely to violate antitrust laws,” Martinez-Olguin added. The judge also established a schedule to evaluate the state attorneys general's request for a preliminary injunction, which could halt the merger indefinitely while the lawsuit proceeds. A hearing has been set for August 3.

Pending a new ruling, the court order prevents Paramount and Warner Bros. Discovery from closing the transaction or taking steps to integrate their operations. The temporary block also prohibits any action—direct or indirect—aimed at consolidating the two companies' businesses prior to a final review of the case.

The lawsuit filed by the states and the arguments

State attorneys general filed a lawsuit to block the merger, alleging that the deal could harm competition in the entertainment industry. They subsequently requested a temporary restraining order and a preliminary injunction to halt the transaction before its completion. 

The lawsuit was filed in a California federal court and brings together the states of Arizona, California, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.

According to the states involved, the union of the two companies would combine two of Hollywood's five major studios, increasing market concentration in the film and television industries. The coalition claims that the merger could result in higher prices, fewer theatrical releases, and reduced diversity of content available to the public.

The attorneys general allege that the deal violates the Clayton Act, a U.S. antitrust law designed to combat practices that could limit competition and foster monopolies. In the lawsuit, the states are asking that Paramount not finalize its acquisition of Warner until the case has been reviewed by the courts.

The dispute represents yet another challenge to Paramount’s acquisition of Warner, which is already facing resistance from regulators. The legal proceedings could drag on for years and come at a time of major shifts in the audiovisual industry, as companies seek to consolidate operations to compete in the streaming and entertainment market.