Paramount Global’s planned $110 billion acquisition of Warner Bros. Discovery has hit a significant legal obstacle that threatens to delay the deal for months and potentially increase costs by billions of dollars. A federal judge on Monday granted a two-week pause on the merger following requests from a coalition of states opposing the transaction on antitrust grounds.

U.S. District Judge Araceli Martínez-Olguin, based in Oakland, California, indicated the deal “likely” violates antitrust laws and will hold a hearing in early August to determine whether the acquisition should be blocked until a full trial can be held. The opposing states, led by California and involving 11 others, are seeking a trial set for April 2027. Paramount has not proposed an alternative timetable, and no trial date is currently scheduled.

The delay comes at a critical moment for Paramount, which had anticipated closing the deal as soon as this week with expected regulatory clearance from European authorities. The extended timeline poses serious financial risks, because Paramount is contractually obligated to pay Warner Bros. shareholders approximately $7 million daily if the acquisition is not finalized by the end of September. A trial delayed until April could, therefore, impose more than $1 billion in additional costs in late fees alone.

In her ruling to temporarily halt the merger, Judge Martínez-Olguin cited the public interest, saying the states’ legal challenge is likely to prevail and would be harmed if the merger proceeds prematurely. Paramount is expected to appeal, but any higher court ruling on the matter could be months away, potentially extending the uncertainty well into next year.

The opposition also includes the Writers Guild of America, which argues that the merger would reduce competition in film and television writing markets.

Paramount secured the deal in February after outbidding Netflix in a highly competitive process. The merger would combine two major Hollywood studios with vast film libraries including titles such as Casablanca, Harry Potter, and Mission: Impossible. It would also bring together significant media assets, including CNN, CBS, the streaming platform HBO Max, and numerous cable networks.

Paramount officials maintain the merger will enhance competition in the entertainment industry, particularly in relation to streaming giants like Netflix, Apple, and YouTube. The company also has received approval from the U.S. Justice Department. In a statement, Paramount described the merger as “lawful, pro-competitive, and beneficial to consumers, creators, workers, and the entertainment industry.”

The states argue that the combined entity would control more than 27 percent of the theatrical film market and over 30 percent of high-budget blockbusters. Post-merger, four companies—Paramount, Walt Disney, Universal, and Sony Pictures Entertainment—would dominate over 90 percent of the market for widely released films. Additionally, the states highlight concerns about cable TV channel licensing, where the merger would unite the second- and third-largest providers with over 50 channels, controlling roughly 34 percent of viewership.

Paramount counters that its market shares in film and television markets do not reach levels deemed illegal under federal antitrust laws and that the deal is aimed at achieving necessary scale.

In efforts to resolve the dispute, Paramount’s chief legal officer, Makan Delrahim, said the company has proposed remedies to California officials, including written commitments to release 30 theatrical films annually and to ramp up television production. However, California Attorney General Rob Bonta has expressed skepticism toward such promises and favors more substantive structural changes, such as divestitures.

When asked about potential concessions, including the sale of CNN or other cable properties, Delrahim stated Paramount is “open to all legitimate discussions” and that “nothing’s off the table,” signaling flexibility amid ongoing negotiations.