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NEW YORK (AP) — A federal judge on Monday ordered Paramount and Warner Bros. Discovery to halt their $81 billion merger for at least two weeks, allowing states that are challenging the deal more time to see their case through in court.

Twelve states, led by California, sued to block Paramount’s pending buyout of Warner last week — alleging that such a combination would “extinguish competition” in Hollywood and lead to fewer choices for consumers, particularly moviegoers and cable customers across the U.S.

The states’ top prosecutors called on Warner and Paramount to not close the transaction until after a court had time to fully evaluate their claims. And when the companies refused, they filed for a temporary restraining order — which is what District Judge Araceli Martínez-Olguín granted on Monday. That opens the door to a potential preliminary injunction that the states are also seeking to effectively block the deal.

“This is a critical first win in our case to ensure this megamerger never sees the light of day,” California Attorney General Rob Bonta said in a statement Monday. “History tells the tale of what happens when a few people have great power over markets that are central to Americans’ lives: fewer opportunities for more people, worse products and services for all people.”

A Warner-Paramount tie-up would bring together two of the five last legacy studios in Hollywood — as well as a host of TV networks, titles filling streaming libraries and news operations. Warner’s HBO Max, fan favorites like “Harry Potter” and even CNN would come under the same roof of Paramount-owned CBS, movies like “Top Gun” and the Paramount+ streaming service.

Deal is paused for at least two weeks

The temporary restraining order granted Monday halts the deal from progressing for at least 14 days, although the pause could be extended for up to 28 days. The court has set Aug. 3 as a date for a hearing on the states’ preliminary injunction motion, but that schedule could also be pushed back.

The clock is ticking. Ahead of Monday’s decision, the companies proposed wrapping up a preliminary injunction hearing by the end of August, leaving time to make a possible appeal by Sept. 30 — a date on the top of Paramount’s mind because it’s pledged to pay shareholders added “ticking fee” compensation amounting to about $7 million per day if the deal isn’t closed by then.

But the states called such a timeline unprecedented and unfair. They maintain that payments Paramount might have to incur after Sept. 30 were the risk of a decision the company made on its own — and argued in a hearing held Friday that commencing a trial in April 2027 would allow enough time for discovery and presenting proper evidence.

Including billions of dollars in debt, Paramount’s proposed purchase of Warner is currently valued at nearly $111 billion based on outstanding shares.

What the states are challenging

Paramount has repeatedly pointed to tech and streaming companies’ growing reach across the entertainment industry — and argues that merging with Warner would particularly help it compete with bigger rivals like Netflix. Last week, it said the states’ challenge would help shield Netflix and others “who have harmed the market for theatrical exhibition” from meaningful competition.

The states’ case doesn’t focus on streaming. It alleges that a combined Paramount-Warner merger violates federal antitrust law because of what the companies’ combined reach would become across three markets: theatrical movie distribution, theater releases of bigger blockbusters and the licensing of basic cable channels.

Their complaint says a combined Paramount-Warner could control nearly a third of both the theatrical film distribution market as well as basic cable programming. The states argued this would create a “media behemoth” with enough power to both raise prices for consumers and threaten workers’ wages, while reducing production and quality of content.

In terms of movie theater releases, Paramount’s lawyers have pointed to a growing list of blockbuster hits from studios that are not in Hollywood’s “big five,” such as A24 and Amazon’s MGM. The states maintain the core legacy studios — which beyond Warner and Paramount include Disney, Universal and Sony — still make up the vast majority of the market.

Beyond California, states challenging the deal include Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.

Other regulatory clearances

Outside of the U.S., Paramount has touted greenlights from regulators in countries like China, Canada and Australia. But regulatory reviews are also ongoing in the European Union and the U.K., which has separately suggested it may intervene.

Meanwhile, the Writers Guild of America has filed its own lawsuit seeking to block the merger. And Paramount faces additional legal fights, including from a shareholder accusing CEO David Ellison and his father Larry Ellison (who is putting up tens of billions of dollars to back the deal for his son’s company) of promising “illegal, private benefits” to Trump in order to get the merger through.

Paramount has repeatedly dismissed such accusations, and the U.S. Justice Department maintained its review was not political.

Still, politics have come into question throughout Paramount’s quest for Warner. Beyond Trump’s relationship with the Ellison family, critics of the deal also stress what new ownership could mean for Warner assets like CNN — a network that has long attracted ire from the Republican president — particularly in light of editorial turmoil at Paramount-owned CBS since Skydance’s takeover.

The contrast between the 12 states’ complaint, brought forth by all Democratic attorneys general, and the federal government’s blessing only underlines all of that further.

“It’s a political merger. It’s the product of the president’s engagement in private business affairs,” New York Attorney General Letitia James said in a webinar about the states’ case last week. She maintained the states had been successful in challenging the Trump administration before and “we’re not finished yet.”

WYATTE GRANTHAM-PHILIPS

Grantham-Philips is a business reporter who covers trending news for The Associated Press. She is based in New York.

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