Judge halts the merger between Paramount and Warner Bros.

Judge Araceli Martinez-Olguin has secured a 14-day halt to the Paramount and Warner Bros. merger because it may violate federal antitrust laws, which could lead to higher prices and fewer movies and television series. This is a first step toward the controversial merger being blocked.

The courts see problems in the merger

All of this was made possible by a coalition of 12 states, led by California, that has challenged this merger in court. The states are seeking a preliminary injunction, which would block the merger until the judge rules on the merits of the states’ lawsuit. That could take months or years. This could make the merger fall apart on its own.

But before that it has to be approved. The 14-day restriction can be extended up to a maximum of 28 days, although that date could also be pushed back if both parties reach an agreement. So Paramount could be in for a long, painful ordeal.

The plaintiff states argue that the merger would harm competition in the television and film market by combining two of the three television programmers and two of the five distributors. Paramount, meanwhile, has defended itself by arguing that television is a declining medium and that the court should disregard the market concentration estimates made by the states.

While it’s impossible to know how this will end, we do have an obvious deadline. If the deal hasn’t closed by September 30, Paramount will owe millions of dollars for each day of delay to Warner Bros. investors for breach of contract, which is why they’re motivated to resolve this lawsuit quickly. So this lawsuit is a major obstacle that may have effectively killed the merger before it closes even if it doesn’t ultimately block it.