Paramount stops playing defense

For the first week of the Paramount Skydance Corp.-Warner Bros. Discovery Inc. merger litigation, the company acted as if it wanted speed.

Now the company is acting like it wants to win, even if that takes a while.

Last week's surprise decision to postpone the Aug. 3 preliminary injunction hearing -- and accept a delay that reportedly could cost more than $200 million a month beginning in October -- looks less like a retreat than a strategic reset.

The message from Paramount Skydance's legal team is becoming clearer: stop fighting over the preliminary injunction and start preparing for trial.

A preliminary injunction hearing was always the most dangerous stage of the case. The states needed only to show they were likely to succeed, and U.S. District Judge Araceli Martinez-Olguin of Oakland -- an appointee of President Joe Biden -- signaled during the TRO proceedings that she found their antitrust theory credible.

Once Martinez-Olguin granted the TRO, the momentum has shifted. State of California et al. v. Paramount Skydance Corp. et al., 26-cv-07116 (N.D. Cal., filed July 13, 2026).

Rather than risk a preliminary injunction that could haunt the litigation -- and perhaps the deal itself -- Paramount appears to have decided to absorb the carrying costs, build a fuller evidentiary record and fight on terrain it views as more favorable.

"It became clear they were going to lose the preliminary injunction," said George A. Hay, an antitrust expert at Cornell Law School. "I think [Paramount Skydance was] surprised by what a strong case the states put together and how receptive the judge was to it."

The hiring of Wilkinson Stekloff LLP's Beth Wilkinson reinforces that reading.

Companies don't bring in one of the nation's premier trial lawyers -- who prevailed in the last major antitrust challenge, in which the Federal Trade Commission tried unsuccessfully to block Microsoft Corp.'s purchase of Activision Blizzard Inc. -- because they're planning to settle next week.

"Beth is an outstanding trial lawyer -- they brought her in to win the trial," said Daniel A. Crane, a professor at the University of Michigan Law School.

The real battle is no longer the injunction

The central question now isn't whether the merger should be paused.

It's whether the states' definition of the relevant market survives.

If Paramount Skydance can persuade Martinez-Olguin that Amazon.com Inc., Apple Inc., and Netflix Inc. belong in the same competitive market as the traditional Hollywood studios, much of the states' concentration analysis becomes harder to sustain.

If the market remains theatrical studios and legacy media companies, the states have a much cleaner structural case.

William E. Kovacic, a former chair of the FTC during the Bush administration, said the company's lawyers will argue that "the states' case is looking through the rear-view mirror."

Further, the percentage that a combined Paramount-Warner Bros. company would control is on the low end of the percentage that courts usually consider a violation of antitrust law.

"This is a down-the-middle complaint, a straightforward antitrust fight," said Harry First, professor emeritus at NYU School of Law.

Expect virtually every filing from here forward to orbit around market definition.

Even if Martinez-Olguin rules against Paramount Skydance, that battle will continue at the 9th U.S. Circuit Court of Appeals and possibly the U.S. Supreme Court.

The wild card

The most interesting legal subplot may have nothing to do with Paramount Skydance.

Martinez-Olguin relied heavily on U.S. v. Philadelphia National Bank -- the U.S. Supreme Court's 1963 merger precedent that created the modern structural presumption against highly concentrated mergers.

That's exactly the precedent many conservatives have questioned for years.

Justice Brett Kavanaugh has previously suggested, in a 2017 dissent while he was on the D.C. Circuit Court of Appeals, that the Supreme Court moved away from that framework decades ago.

If this case reaches the Supreme Court, it could become another vehicle for redefining modern merger law.

But legal observers question both whether the court will use this case as a vehicle to overturn Philadelphia National Bank and also wonder if the legal battle will last long enough for a merger ruling that the justices have avoided since the 1970s.