A federal judge halted the $111 billion deal two days before closing. What the ruling means for New Jersey's $833 million film boom and the Bayonne studio where Paramount is the anchor tenant.
A federal judge blocked the $111 billion Paramount-Warner Bros. merger two days before it could close, handing New Jersey Attorney General Jennifer Davenport and a 12-state coalition a last-minute win.
U.S. District Judge Araceli Martínez-Olguín issued the 14-day order Monday. The companies could have closed Wednesday, according to the states' filing.
Paramount and Warner Bros. Discovery refused a request to stand down voluntarily — a request made the same day the suit was filed, July 13. After an about 80-minute emergency hearing Friday in Oakland, Martínez-Olguín found the states showed enough evidence of market concentration to trigger a legal presumption that the merger violates antitrust law.
"Today's order, which temporarily blocks this unlawful merger while our case continues, is a major win for consumers," Davenport said in a statement Monday. "It is the first step in what I hope will be a total victory for New Jerseyans, who can ill-afford another price hike caused by opportunistic billionaires."
Court Found a Presumption of Antitrust Violation
The coalition's lawsuit, led by California Attorney General Rob Bonta, argues the merger would illegally concentrate three markets: wide-release theatrical films, anticipated top-grossing movies and basic cable network licensing.
The states' filings put hard numbers to the concentration: roughly 27 percent of wide-release theatrical distribution, more than 30 percent of anticipated top-grossing films, and 27 percent of basic cable licensing revenue in a market that still reaches about 67 million households. The $111 billion deal — $81 billion in equity, $31 per share — would also bring about $6 billion in cost cuts, which the states argue means layoffs and less content.
Martínez-Olguín wrote that unwinding the deal would be "difficult, if not impossible" once operations consolidated and employees were reassigned.
In a footnote, she rejected Paramount's argument that streaming efficiencies should offset theatrical harms, noting courts have repeatedly refused to let efficiencies in one market excuse competitive harm in another.
Bonta called the ruling "a critical first win in our case to ensure this megamerger never sees the light of day."
New Jersey Subsidizes the Company It Is Suing
Davenport has framed the case around New Jersey's production boom. She announced the suit July 14, framing it around the state as "the birthplace of the American film industry" and a burgeoning hub for film and television production.
State data backs her framing. Productions spent a record $833 million in New Jersey in 2024, according to the New Jersey Economic Development Authority, surpassing the $701 million mark set in 2022. Netflix is building a $900 million-plus studio at Fort Monmouth, topped off its first four soundstages last month with an opening targeted for 2027. Lionsgate broke ground in December on a $125 million, six-stage complex in Newark. The state's tax credit program offers up to a 40 percent credit and is funded through 2049.
But then there is the part Trenton talks about less. Paramount Skydance signed a 10-year, 285,000-square-foot lease in October to anchor 1888 Studios in Bayonne, the 58-acre, 23-soundstage complex billed as the largest production facility in the Northeast. Days later, the NJEDA board designated Paramount as New Jersey's third and final Studio Partner, alongside Netflix and Lionsgate, making it eligible for a share of a separate $150 million incentive pool.
That situation puts the state's attorney general in the position of suing the anchor tenant of its biggest planned studio.
Davenport's office has not said whether the suit could affect Paramount's Bayonne plans, and Paramount has not commented on the lease since the ruling. The complaint does not isolate New Jersey-specific consumer losses either; its market data relies on the sealed third-party figures.
Paramount Calls the States' Case "Without Merit"
Paramount has called the states' arguments "without merit" and "without any basis in modern market realities," pointing to commitments it made to secure the deal: 30 theatrical films a year, a 45-day theatrical window and two distinct film studios. Those pledges were part of the package Paramount presented to shareholders, who approved the deal April 23 by a vote of 1.743 billion shares to 16.3 million, though shareholders separately rejected CEO David Zaslav's exit package in a nonbinding vote.
Paramount also points to the Justice Department's review, which stretched across months and included additional information requests and hearings, before the Trump administration announced June 12 it would not oppose the deal or require asset sales.
The company's financing has drawn scrutiny from lawmakers and regulators. Roughly $24 billion comes from Saudi Arabia's Public Investment Fund, Qatar and Abu Dhabi, leaving the combined company about 49 percent foreign-owned, albeit with nonvoting shares. Larry Ellison of Oracle personally guaranteed $43.3 billion of the equity.
September Deadline Looms for the Merger
The 14-day restraining order expires Aug. 3, the same day Martínez-Olguín will hear arguments on a preliminary injunction that could halt the merger for months. The judge can extend the order to 28 days. At Friday's hearing, Paramount's lead attorney, Jeffrey Kessler, suggested the companies could agree not to close for up to a month if the hearing were set for late August. Martínez-Olguín set it for Aug. 3 instead.
The Federal Communications Commission has not yet approved the deal, which requires sign-off because Paramount holds broadcast licenses for 28 local television stations.
Starting September 30, Paramount faces roughly $6.9 million in daily ticking fees if the deal remains unclosed, or about $650 million per quarter. The merger agreement's outside date is March 4, 2027, extending automatically to June 4, 2027 if antitrust review remains pending. If regulators kill the deal outright, Paramount owes a $7 billion termination fee.
Two other lawsuits are pending in the same courthouse. The Writers Guild of America East and West filed a separate challenge July 14, calling the deal a monopsony threat that would depress wages for screenwriters. Martínez-Olguín separately denied a preliminary injunction request from Paramount+ subscribers on July 16, ruling the plaintiffs had not cleared the high bar for such relief.
Overseas, the European Commission approved the merger July 22, on the condition that Paramount terminate its stake in United International Pictures, its joint venture with Universal, within 13 months. The company is also prohibited for 10 years from entering joint film distribution agreements with Universal in the European Economic Area. An independent trustee will monitor Paramount's compliance under Commission supervision.
Paramount said the EC's conclusions directly refute key assumptions underlying the state AGs' complaint, noting the Commission declined to treat blockbuster films as a standalone market and considered streaming platforms direct competitors to linear television.
British Culture Secretary Lisa Nandy remains "minded to intervene," with a decision expected by August 7. Australia, China, Saudi Arabia and 62 other jurisdictions have either approved the transaction or declined to challenge it.
New Jersey's legal team includes deputy attorneys general from the Division of Law's Affirmative Civil Enforcement Practice Group, who won admission to appear in the California court for Friday's hearing. California's antitrust section is arguing the coalition's case.
Nine months ago, New Jersey certified Paramount as a partner in its film future. On August 3, Davenport's coalition will ask a judge to make the block permanent. Both policies now move on parallel tracks, with the merger's fate — and Paramount's footprint in New Jersey — in the hands of a federal judge 3,000 miles from Trenton.
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