Judge grants TRO blocking Paramount-Warner Bros merger but expedites hearing on preliminary injunction

A federal judge in Oakland handed Paramount Skydance Corp. and the 12 states suing to block its acquisition of Warner Bros. Discovery Inc. a mixed result in a Monday ruling granting plaintiffs' motion for a temporary restraining order that blocks, for now, the entertainment industry merger.

U.S. District Judge Araceli Martínez-Olguín granted the TRO in litigation brought by California Attorney General Rob Bonta and 11 other states, who contend the merger would reduce competition in violation of Section 7 of the Clayton Act. State of California et al. v. Paramount Skydance Corp. et al., 26-cv-07116 (N.D. Cal., filed July 13, 2026).

During Friday's hearing, a lawyer for Paramount Skydance - Jeffrey L. Kessler, a partner with Winston Taylor LLP - all but conceded the TRO and instead focused on scheduling a preliminary injunction hearing by mid- to late August.

Kessler got an earlier hearing on the motion. Martinez-Olguin scheduled the preliminary injunction hearing for Aug. 3 - weeks sooner than Kessler requested.

He argued for the August hearing, saying Paramount Skydance would suffer "severe harm in terms of penalties that total $200 million a month" in fees owed to Warner Bros. Discovery shareholders if the $110 billion deal does not close by Sept. 30.

Kessler said the company was in a "unique situation" due to the pending fees.

The states' motion for a preliminary injunction is due Thursday, with Paramount Skydance's opposition to be filed July 27, with the states' reply due three days later.

But if Paramount Skydance got good news on the scheduling front, the states could be pleased about Martinez-Olguin's reliance in her TRO on a 63-year-old U.S. Supreme Court decision holding that Section 7 of the Clayton Act applies to mergers - an argument emphasized by James H. Weingarten, a partner with Milbank LLP who represents the states. U.S. v. Philadelphia National Bank, 374 U.S. 321, 363 (1963).

"Here, Plaintiffs present compelling evidence that the combined firm resulting from the transaction will possess substantial market share in the wide-release theatrical distribution market (anticipating 27% market share for wide-release theatrical distribution market)," wrote Martinez-Olguin, an appointee of President Joe Biden.

"On this combined firm market share alone, the Court is persuaded that it can presume the proposed merger is likely to violate antitrust laws," she added.

Martinez-Olguin also cited a 9th U.S. Circuit Court of Appeals ruling from a decade ago as well as a preliminary injunction earlier this year blocking cable TV station giant Nexstar Media Group Inc.'s proposed acquisition of competitor Tegna Inc. following an antitrust lawsuit by DirecTV LLC and state attorneys general.

The injunction halting the Nexstar-Tegna merger by Chief Judge Troy L. Nunley of the Eastern District of California is on appeal to the 9th U.S. Circuit Court of Appeals. DirecTV LLC et al. v. Nexstar Media Group Inc. et al., 26-2490 (9th Circ., filed April 22, 2026).

Both sides praised the TRO and the early preliminary injunction hearing.

"This is a critical first win in our case to ensure this megamerger never sees the light of day," California's attorney general, Rob Bonta, a Democrat who is leading the states' lawsuit, said in a statement.

"We are grateful for the Court's swift order on the motion for a TRO," a Paramount Skydance spokesperson said. "Like the timing agreement to which we were willing to stipulate, this TRO preserves the status quo while the Court considers the antitrust issues presented."

"We are confident the evidence will demonstrate that the State AGs' antitrust arguments are without merit as their alleged markets and claims of anticompetitive effects are without any basis in modern market realities," the company added.

The companies have argued the merger is necessary to compete in a rapidly changing entertainment market, while the states contend combining two of Hollywood's major studios would reduce competition in theatrical releases, "blockbuster" films and basic cable TV programming.

The Trump administration's Department of Justice approved the deal, which would bring Paramount Skydance, Warner Bros. Discovery, CNN and CBS under the control of one of the president's allies, the Ellison family. European Union regulators may decide whether to back the acquisition as early as Tuesday, which led to concern by the states that Paramount Skydance and Warner Bros. Discovery would close its deal on Wednesday.

Martinez-Olguin said there was no rush to complete the deal before Paramount Skydance starts to incur additional costs at the end of September.

"Paramount and Warner Bros. will continue to operate as separate, viable companies competing in the marketplace while they wait for the Court to adjudicate this case," she wrote. "The balance of equities, combined with the public's vital interest in antitrust enforcement, therefore tips sharply in favor of the requested injunctive relief."