A coalition led by California alleges the proposed entertainment merger would reduce competition, increase prices, limit consumer choice and give the combined company control over nearly one-third of U.S. film production and basic cable programming.
By yourNEWS Media Newsroom
SAN FRANCISCO — A coalition of 12 state attorneys general filed an antitrust lawsuit Monday seeking to stop Paramount Skydance’s proposed acquisition of Warner Bros. Discovery, arguing that the transaction would give the combined company excessive control over the American film, television and streaming markets.
The lawsuit was filed in the U.S. District Court for the Northern District of California and is led by California Attorney General Rob Bonta, according to CNBC.
Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington joined California in challenging the deal.
The states contend that combining Paramount and Warner Bros. Discovery would reduce competition, increase prices and leave consumers with fewer entertainment choices.
Bonta said the proposed merger would produce “higher prices, lower quality, and less content for film and television,” while harming consumers, movie theaters and cable distributors.
The transaction has also drawn opposition within Hollywood, where critics have warned that consolidation could lead to fewer theatrical releases and substantial job losses across the entertainment industry.
If completed, the deal would place Paramount Pictures and Warner Bros. under one corporate owner while combining the Paramount+ and HBO Max streaming platforms.
Paramount CEO David Ellison has previously said the two streaming services would eventually operate as a single platform.
The merged company would also control a large portfolio of television properties, bringing CBS, MTV and BET together with Warner Bros. Discovery networks including CNN, TNT and other cable channels.
According to the states’ lawsuit, the combined business would control nearly one-third of film production in the United States and almost one-third of basic cable programming.
The attorneys general have asked Paramount and Warner Bros. Discovery to delay closing the transaction until the legal challenge is resolved.
They said they would seek a temporary restraining order if the companies attempt to complete the merger before the court rules.
Warner Bros. Discovery shareholders approved the transaction in April.
Ellison recently said the companies remained on schedule to close the deal by September.
He has pledged that the combined studio would release approximately 30 movies annually and said protecting employment would remain a priority.
Supporters of the merger argue that Paramount and Warner Bros. Discovery need greater scale to compete with larger technology and entertainment platforms.
Stephen Moore, speaking as a member of a pro-merger economic forum, said the entertainment business is undergoing a fundamental transformation.
“The entertainment industry is undergoing one of the most dramatic transformations of any sector in the American economy,” Moore said. “Paramount and Warner Bros. are competing every day against Netflix, Amazon, Apple, Disney, YouTube, TikTok and other enormously well-capitalized global platforms.”
Moore said combining the companies would strengthen their ability to compete and invest.
“Bringing these companies together would create a stronger American competitor capable of investing in more content, more innovation and more jobs,” he said.
Moore is a member of Unleash Prosperity Now, which released a report supporting the merger last month.
The organization also supports lower regulation, reduced or eliminated tariffs and increased competition in the entertainment industry.
The Paramount-Warner Bros. Discovery transaction began taking shape last September, shortly after Paramount completed its merger with Skydance and Ellison turned his attention toward Warner Bros. Discovery.
Following multiple bids and a formal sale process, Warner Bros. Discovery initially agreed to sell its film studio and streaming assets to Netflix.
Paramount later launched a hostile offer, revised its proposal and eventually reached an agreement to acquire all of Warner Bros. Discovery for $31 per share after Netflix abandoned its planned transaction.
The acquisition attracted scrutiny from lawmakers in the United States and Europe, including concerns about foreign financing connected to Paramount’s bid.
The Justice Department’s Antitrust Division cleared the transaction in mid-June.
“The Division has completed its analysis of the proposed merger of Paramount and Warner Bros. and determined based on the evidence received in its investigation that the transaction is not likely to result in harm to competition or American consumers,” the department said.
The merger has also received approval from several international regulators.
The European Union remains the last major jurisdiction reviewing the deal.
The European Commission set a provisional July 22 deadline for its decision after Paramount offered concessions intended to address regulators’ concerns.
The states’ lawsuit now creates a significant new obstacle even though the Justice Department and several foreign regulators have approved the transaction.
The court challenge is expected to focus on whether the combination would give the merged company enough control over film production, television networks and streaming distribution to reduce competition and harm consumers.
Paramount and Warner Bros. Discovery have maintained that the deal would create a stronger competitor capable of challenging major global media and technology companies.
The 12 states argue instead that the merger would concentrate too much entertainment content and distribution power under a single company while increasing the risk of higher prices, fewer releases and industry job cuts.
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