A federal judge has temporarily paused the $110bn acquisition of Warner Bros Discovery by Paramount Skydance, siding with Democratic-led states that argued the deal would stifle competition. US District Judge Araceli Martínez-Olguin granted a temporary halt while she considers the legal challenge, ensuring Paramount and Warner Bros will continue to operate separately.

A hearing is scheduled for August 3 to determine if the pause will be extended. The ruling casts doubt on Paramount's timeline to finalize the deal, with an October 1 deadline looming, after which Paramount would owe $650mn quarterly to WBD shareholders. This fee was offered to secure the merger amid competition from Netflix.

The potential merger, which would unite major film studios, news networks like CBS and CNN, and streaming services HBO Max and Paramount Plus, is being challenged by a coalition of state attorneys-general led by California's Rob Bonta. He hailed the judge's order as a "critical first win." Paramount remains confident that antitrust arguments lack merit, while analysts suggest the August 3 hearing will offer a clearer indication of the court's stance on market competition.