By Ashley Robinson Paramount Skydance’s proposed acquisition of Warner Bros. Discovery is facing major legal challenges in the United States, even after the U.S. Department of Justice closed its antitrust investigation and said the transaction was not likely to harm competition.
The proposed deal, valued at approximately $110 billion including debt, would combine major film studios, television networks and streaming services. The transaction would bring brands such as Paramount Pictures, CBS, Paramount+, Warner Bros., HBO Max, CNN and Discovery under one corporate owner.
A coalition of 12 state attorneys general and the Writers Guild of America have filed separate lawsuits seeking to stop the merger. The cases argue that the combination would reduce competition, harm workers and give the merged company too much power over film, television and streaming markets.
What is the Paramount-Warner Bros. deal?
Paramount Skydance agreed to acquire Warner Bros. Discovery in an all-cash transaction valued at $31 per Warner Bros. Discovery share. Warner Bros. Discovery shareholders approved the deal, and the companies had hoped to close the transaction in the third quarter of 2026.
The proposed merger would create one of the largest entertainment companies in the world. Paramount would gain Warner Bros.’ film and television production operations, HBO Max, CNN, the DC entertainment portfolio and a large library of movies and programs.
Paramount has argued that the deal is necessary to compete with much larger technology companies and global streaming platforms. The company says the combined business would give consumers a stronger alternative to Netflix, Amazon and other dominant digital companies.
The lawsuit filed by 12 states
California Attorney General Rob Bonta led a coalition of 12 attorneys general that sued Paramount and Warner Bros. Discovery on July 13, 2026, in the U.S. District Court for the Northern District of California.
The coalition includes the attorneys general of Arizona, California, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.
The states claim that the merger violates Section 7 of the Clayton Act, which prohibits transactions that may substantially lessen competition or tend to create a monopoly. Their complaint argues that the combined company would control a significant share of theatrical film distribution and basic cable programming.
According to the states, the deal could give Paramount greater leverage over movie theaters, cable distributors, workers and consumers. They warn that theaters could face tougher revenue negotiations, while cable companies could be pressured to accept higher fees for popular channels.
The states also argue that reduced competition could lead to higher ticket prices, fewer movies and television programs, less variety and weaker investment in content.
Federal court temporarily paused the merger
After the states filed their lawsuit, a federal judge issued a temporary restraining order preventing the companies from completing the merger while the court considered the states’ request for additional relief.
Paramount and Warner Bros. Discovery later agreed to remain separate until five days after the court rules on the merits of the state lawsuit or until June 1, 2027, whichever comes first.
On August 4, 2026, the court set the antitrust trial to begin on March 2, 2027. The trial is expected to last several weeks. Until the case is resolved, Paramount cannot simply complete the deal based only on shareholder approval or the DOJ’s decision.
The Writers Guild lawsuit
The Writers Guild of America filed a separate lawsuit on July 14, 2026, in the U.S. District Court for the Northern District of California. The guild represents writers who work in film, television and streaming.
The WGA argues that Paramount and Warner Bros. Discovery are important competing buyers of screenwriting and television writing services. According to the guild, removing one major buyer would reduce writers’ bargaining power and make it easier for the remaining companies to lower compensation or worsen contract terms.
The WGA lawsuit focuses on writers of high-budget theatrical films, writers employed on episodic television and streaming series, and television writers working under overall deals.
The guild claims that the merger could lead to fewer films and series, fewer opportunities for writers, fewer overall deals, reduced pay and less variety in entertainment programming. Paramount disputes the idea that the deal would harm workers and says a stronger combined company could create more demand for content.
What the Department of Justice decided
The DOJ closed its investigation in June 2026 and concluded that the merger was not likely to harm competition in streaming video, linear television or theatrical film production and distribution.
The department said its review included millions of documents, business data, depositions and information from industry participants. It concluded that the deal could increase competition by creating a stronger rival to the biggest streaming platforms.
The state attorneys general and the Writers Guild are not bound by the DOJ’s decision. They are pursuing their own cases under federal antitrust law and may present evidence that differs from the department’s analysis.
Other legal challenges
The merger has also faced shareholder-related litigation involving allegations that proxy materials did not fully disclose information about the transaction process, the value of Warner Bros. Discovery and possible conflicts involving directors or financial advisers. Paramount’s public filings state that one such disclosure lawsuit was resolved in April 2026 after additional litigation activity.
In addition, a private antitrust action was filed by consumers who argue that the merger could reduce competition in streaming, cable television, news media and theatrical entertainment. That case also seeks to block the transaction.
These cases are separate from the state attorneys general lawsuit and the WGA action. Their claims and outcomes may not be identical.
What happens next
The March 2027 federal trial will be the most important stage of the state antitrust lawsuit. The court will examine the relevant markets, the companies’ market shares, the effect on theaters and distributors, and whether the merger is likely to harm consumers or workers.
Paramount could still negotiate with the states, offer additional commitments or seek a settlement before trial. If the transaction is abandoned, Paramount could face a termination payment estimated at approximately $7 billion. If closing is delayed after the contractual deadline, Paramount may also owe Warner Bros. Discovery shareholders daily or quarterly “ticking” payments under the merger agreement.
The lawsuits do not mean the merger has been permanently blocked. They do mean the deal cannot proceed normally while the federal court’s orders remain in place. The final outcome could be a court-approved merger, a settlement with conditions, a failed transaction or a trial ruling that permanently stops the combination.