California and 11 other states have filed for a temporary restraining order and a preliminary injunction to prevent the Paramount-Warner Bros. deal from closing while the states pursue an antitrust lawsuit.
In a motion filed on Monday evening, the states asked a federal judge to act by July 22. Paramount has previously informed the states that it will not close the transaction before that date.
“The Transaction will eliminate competition between Paramount and Warner Bros. and enable the combined entity to raise prices and reduce output,” the motion states. “Plaintiff States have an interest in enforcing antitrust laws and their citizens face the risk of profound and irreversible injury in the absence of an injunction.”
The states filed a lawsuit earlier in the day, alleging that the $111 billion transaction violates federal antitrust law in three markets: wide-release theatrical distribution, blockbuster film distribution, and basic cable TV distribution. The states argued that the deal would hurt consumers as well as theater owners and cable and satellite companies.
Paramount Skydance quickly responded, saying the states had a “fundamentally flawed” understanding of the facts and the law.
“Delaying this transaction will only harm entertainment workers who have already suffered over recent years as technology has disrupted their livelihood and cost California tens of thousands of entertainment jobs,” the company said.
To get an injunction, the states will have to persuade a judge that the case has a likelihood of success, and that they will suffer “irreparable harm” in the absence of an injunction. The states argue that if the deal is allowed to close — and subsequently ruled unlawful — it will impossible to “unscramble the egg” at that point.
The California attorney general’s office had said earlier on Monday that it would seek an injunction if Paramount did not agree to pause the merger while the case is pending. As expected, the company did not agree to that, prompting the filing.
“These titans of industry must not move to merge until a court properly evaluates our claims,” Attorney General Rob Bonta said in a statement Monday evening. “Today, alongside a coalition of attorneys general, I’ve filed an emergency motion asking the court to immediately stop this merger. I will not let Warner Bros. and Paramount merge without a fight.”
The injunction ruling will be an early test of the strength of the states’ case. In March, a similar coalition was able to obtain an order blocking the Nexstar-Tegna merger from taking effect. That ruling is now on appeal.