Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Paramount Skydance, Warner Bros. Discovery oppose state coalition motion for temporary injunction, (Jul 17, 2026)

By Justin Marcus Smith, J.D.

The parties could not be in sharper disagreement about whether the proposed acquisition is anticompetitive or procompetitive.

Paramount Skydance and Warner Bros. Discovery (collectively, the Paramount parties) have filed their opposition to a motion by a coalition of 12 states, led by California, for a temporary restraining order (TRO) to stop the media companies’ merger. Whereas the states, in their memorandum in support of a TRO, emphasized consolidation and content reduction in their brief in support of a TRO, the Paramount parties countered they will keep their studios separate, as needed to fulfill their intentions to expand output. The Paramount parties were also critical that they have no economic motive to restrict their output in any relevant markets. They also argued that they need to put together a better competitive response to streaming entities Netflix, Prime Video, and Disney+ (State of California v. Paramount Skydance Corp., Case No. 4:26-cv-07116-AMO (N.D. Cal. Jul. 16, 2026)).

Background. In May 2026, five consumers of video, news, and film media filed a private antitrust action, Faust v. Paramount Skydance Corp., No. 3:26-cv-03790-AMO, under Section 7 of the Clayton Act challenging the proposed Paramount Skydance acquisition of Warner Bros. Discovery. They also challenged the Skydance acquisition of Paramount Global completed last year.

On July 13, 2026, California Attorney General Rob Bonta announced that his office was leading a coalition of 12 state attorneys general to block Paramount Skydance from acquiring Warner Bros. Discovery in The State of California et al v. Paramount Skydance Corporation et al., Case No. 26-cv-07116. In that matter, the states of California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington (collectively, the states), moved for a temporary restraining order (TRO) to stop Paramount from closing or consummating its acquisition of Warner Bros. or taking any steps to integrate or consolidate their operations.

The proposed merger between two of the nation’s five major film distributors would leave only four to control over 85 percent of all wide-release theatrical films in the United States.

On July 15, the federal district court in Oakland, California, granted administrative motions by plaintiffs in State of California and Writers Guild of America, West, Inc., et al. v. Paramount Skydance Corporation et al., Case No. 3:26-cv-07212, to relate their cases with Faust, the lowest-numbered case presently before the court. The court applied Civil Local Rule 3-12(a) and found the actions were substantially about the same parties, and an injunction of the same proposed merger transaction, such that it would be unduly burdensome to have duplicative actions before different judges. The court vacated all case management conferences in the three cases, to be rescheduled later, but the briefing schedule set in State of California stands.

The court excluded counsel, on a “not invited” basis, from the newly-related cases from participating in the July 16 hearing on preliminary injunction, motion to dismiss, and ancillary motions in Faust. The court likewise excluded counsel from the Faust and Writers Guild cases from participating in the July 17 hearing on the motion for a temporary restraining order in the instant matter, State of California. The motion also called for Paramount and Warner Bros. to show cause why the court should not issue a preliminary injunction. The Paramount parties purportedly said they might close the transaction as soon as July 22, 2026. The states urged injunctive relief on an emergent basis.

TRO motion. The states’ memorandum in support of a TRO emphasized consolidation and content reduction in the entertainment industry. It identified three relevant antitrust markets: (1) distribution of wide-release theatrical films; (2) distribution of anticipated top-grossing theatrical films; (3) licensing of basic cable channels to distributors.

The states deemed the transaction presumptively unlawful. They alleged it would enable Paramount to raise prices and reduce output by eliminating competition between two of the only five remaining Hollywood studios. The remaining studios would have unprecedented leverage over movie theaters that depend on a competitive supply of films for survival.

In the cable television context, the states alleged the transaction would combine two of the largest basic cable programmers to create a portfolio of over fifty cable channels covering every genre. The states said that would leave cable and satellite providers with “virtually no alternative but to accept the combined entity’s terms.” Consumers would bear the burden of higher prices, lower quality, and lower availability. The states described alleged “planned content reductions,” but this section of the motion brief was entirely redacted.

The states argued the transaction would boost market concentration to a presumptively unlawful level in the three relevant markets, and it would be hard to “unscramble the egg” if the transaction closes.

The states said they were likely to prevail on the merits. They said the transaction was prima facie illegal in light of the controlling percentages of market share and concentration it would create, a presumption the states said the Paramount parties could not rebut. Content reductions were not likely to be efficient but rather an anticompetitive reduction of output. The states outlined anticompetitive effects at length, including that the combined entity and Disney would end up controlling about 59 percent of the basic cable market. Purported Herfindahl-Hirschman Index (HHI) values exceed 2,000 and trigger presumptive illegality in all three relevant markets. Among other alleged bad effects, surviving movie theaters would have fewer top-grossing films to screen.

The states continued that purported procompetitive effects, such as being able to compete more effectively against streaming giants Netflix, Prime Video, and Disney+, could not justify anticompetitive effects in other markets. The states distinguished that the streaming platforms “do not depend on theatrical releases for revenue, and theatres [sic] do not depend on streaming platforms for content.” The states said the transaction was also likely to harm cable, satellite, and equivalent internet-based programming distributors, with about 67 million U.S. household subscribers, by reducing negotiating leverage.

The states said they showed irreparable harm to the extent they established a likelihood the merger would substantially lessen competition in at least one of the relevant markets. That harm could be diffuse, industry-wide, and difficulty to quantify for damages, and again, it would be difficult to unwind the transaction post-closing.

As for the public interest, the states invoked their role as enforcers of the federal antitrust laws to protect their respective residents. Purported likelihood of success meant they automatically showed the public interest and balance of equities each favored preliminary injunctive relief.

Paramount opposition. Paramount and Warner Bros. characterized the states’ motion for a TRO as “one of the weakest merger challenges in modern antitrust history.” They argued the states could not come close to establishing a likelihood of success on the merits because the proposed merger is procompetitive. The Paramount parties urged it would produce more high-quality content; create incentives for investing in job-creating film production; stabilize basic cable in light of cord cutting; and increase the output of theatrical releases in a “challenged entertainment landscape.” They said they also needed to answer the competitive challenge posed by streaming services Netflix, Amazon, and Disney.

The Paramount parties continued that the states presented “gerrymandered” market definitions for the three relevant markets, but they were not going to litigate the definitions on this motion because economic evidence and market realities foreclosed any showing the merger was likely to substantially lessen competition.

As to the states’ stated concern about content available to movie theaters, the Paramount parties contended they actually plan to increase investment in theatrical releases. Paramount said it “nearly doubled” its theatrical leases year over year from 2025 to 2026 and “repeatedly and publicly committed to a release of a minimum of 30 theatrical films per year.” To do that, it claimed it will maintain the Warner Bros. Discovery (WBD) and Paramount studios as separate “with each of their creative teams and lots.”

As for likelihood of success on the merits, the Paramount parties questioned the states’ reliance on circa-2010 HHI thresholds from the 2023 Merger Guidelines. Not only are these not binding on the courts, there are new, lower HHI thresholds. The purported HHI indices for the three relevant markets were “all below the ‘highly concentrated’ threshold of 2,500 for presuming competitive harm in the 2010 Merger Guidelines.”

The Paramount parties continued that the states did not show the merger likely to pose a substantial risk to competition in the proposed theatrical markets. There are low barriers to competition, with “many existing competitors,” including new entrants like Amazon MGM, Lionsgate, and A24, as well as streaming companies with deep pockets like Netflix and Apple. Rival film production and distribution companies can and would expand their theatrical film slates if the merged entity reduces output or tries to increase prices.

Moreover, the Paramount parties said they have an economic rationale to expand output. Paramount cannot starve its theatrical output because it is not a standalone business and will only become more important to Paramount post-merger as a “cornerstone” of anticipated merger synergies. Films will have to be successful at the box-office to succeed later on the streaming services.

Next, the Paramount parties contended the merger would not adversely affect exhibitors’ bargaining power with studios because individual film performance, not slate size, drives that bargaining power. They said there is no economic support for increased leverage over theaters. Theaters decide whether and how long to run films, showtimes, and the number of screens. Individual film performance drives all of those decisions. Bargaining is “film-by-film.”

The Paramount parties said there was also allegedly no likelihood that the merger would reduce competition in the licensing of basic cable channels to distributors. The Paramount and WBD basic cable channel packages are not competitive substitutes. They do not really overlap. They have differing audiences. Combining them would not lead to an increase in bargaining power, it would not be anticompetitive. The fact that some channels might fall within the same broad content category does not necessarily mean they are competitive substitutes.

As for the states’ blackout theory, the Paramount parties said the states ignored that blackouts are far more costly to the basic cable channel owner than to the multichannel video programming distributors (MVPDs). Post-merger, a blackout would expose the combined company to the loss of affiliate and advertising revenue across the entire combined channel portfolio. It would defy economic logic to aim for a catastrophe like that. The states also simply ignored the fact that cord cutting is diminishing the bargaining power of everyone involved with basic cable.

As for irreparable harm without emergent relief, the Paramount parties were critical that the states waited until the doorstep of the closing date to ask for a TRO.

The case is No. 4:26-cv-07116.

Attorneys: Nicole Suzanne Gordon, Office of the California Attorney General, for The State of California.

Companies: Warner Bros. Discovery, Inc.; Paramount Skydance Corporation

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