Paramount-Warner Bros. Discovery Merger Hit With Multistate Antitrust Lawsuit
A coalition of 12 state attorneys general sued Monday to stop Paramount Skydance’s planned acquisition of Warner Bros. Discovery, arguing that the merger would reduce competition across the film, television, streaming and cable industries.
The transaction is valued at approximately $111 billion, making it one of the largest media mergers ever proposed. The states’ case also focuses specifically on the market for “tentpole” films, costly blockbuster releases that generate a significant share of major studios’ revenue.
The antitrust lawsuit was filed in the U.S. District Court for the Northern District of California and is led by California Attorney General Rob Bonta. Attorneys general from Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington also joined the case.
“The unlawful merger of these two entertainment behemoths would lead to higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately, audiences on every sofa and movie theater seat in the U.S.,” Bonta said in a release.
“The coalition has asked Warner Bros. and Paramount not to close the merger until after the judicial process concludes, and if they do not agree, the coalition will be filing a temporary restraining order.”
Paramount pushed back against the allegations, saying it was willing to address genuine competition concerns but did not believe the WBD transaction presented any.
“We are confident the facts and the law support this transaction, and we will continue to defend it vigorously,” a Paramount spokeswoman said.
The lawsuit represents the most substantial remaining legal threat to the merger in the United States after the Antitrust Division of the U.S. Department of Justice completed its review in mid-June and declined to challenge the deal.
“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 states’ action also reflects a broader effort by state attorneys general to pursue antitrust cases independently as federal regulators under President Donald Trump have approved major transactions or settled other competition lawsuits.
In April, state officials obtained a restraining order temporarily halting the proposed combination of broadcasters Nexstar and Tegna. That same month, a coalition of states secured a jury verdict finding that Live Nation, the owner of Ticketmaster, had operated as a monopoly after the Justice Department settled its portion of the case.
Internationally, Paramount has received clearance from more than 20 countries and regions, including China and Australia. The European Union is still reviewing the transaction, however, and the European Commission has set a new provisional deadline of July 22.
The commission said in a public filing this month that Paramount had submitted concessions intended to address concerns about the merger. Britain is also among the jurisdictions that have not yet approved the acquisition, and a British government official said in June that the country was leaning toward conducting its own examination.
If completed, the merger would unite Paramount and Warner Bros., two of Hollywood’s oldest and most recognizable film studios, under one corporate owner. It would also combine the companies’ major streaming services, Paramount+ and HBO Max.
The deal would create the largest collection of television networks in the United States. Paramount’s portfolio includes the CBS broadcast network and cable channels such as MTV and BET, while Warner Bros. Discovery owns CNN, TNT and several other major networks. The resulting company would bring CBS News and CNN under a single media organization.
In their lawsuit, the states pointed to the scale of the proposed company, alleging that it would control nearly one-third of the film market and close to one-third of basic cable television programming.
Paramount has argued that a company of that size is necessary to compete with streaming heavyweights such as Netflix and Amazon. It has also said that savings from combining the two businesses would allow it to spend more on programming and deliver stronger content to consumers.
Concerns about the transaction have grown across Hollywood, where actors, documentary filmmakers and producers have warned that further consolidation could lead to fewer theatrical releases, reduced spending on film and television projects and significant job losses. More than 1,000 writers, performers and directors signed a letter in April opposing the merger.
Paramount CEO David Ellison has said he is committed to protecting jobs after the transaction. In sworn declarations filed last month in a separate lawsuit brought by streaming subscribers, Paramount executives said the combined company planned to release at least 30 movies in theaters each year.
The executives also said new films would remain exclusively in theaters for at least 45 days before becoming available on streaming platforms.
Paramount additionally floated potential investments in California while attempting to avoid a state challenge. One proposal involved creating a $50 million training fund for unionized workers whose jobs could be disrupted by emerging technologies, including artificial intelligence, according to people familiar with the discussions.
Bonta has publicly indicated that he favors “structural remedies” to address his competition concerns, a term that generally refers to requiring a company to sell or spin off part of its business rather than relying solely on promises about its future conduct.
Warner Bros. Discovery shareholders approved the transaction in April. Ellison said during a recent earnings call that the deal remained on schedule to close by September.
Under the agreement, Paramount would owe Warner Bros. Discovery shareholders roughly $650 million in cash for every quarter the transaction remains unfinished beginning in October.
Ellison first turned his attention to WBD last September. Within weeks of the Paramount-Skydance merger closing, the newly combined company made its initial approach, triggering multiple bids and eventually prompting a formal sale process.
David Ellison, a producer whose credits include “Top Gun: Maverick,” acquired Paramount last year with financial backing from his father, Oracle co-founder Larry Ellison. He later mounted a campaign to outbid Netflix for Warner Bros. Discovery and reached an agreement to buy the company in February.
Warner Bros. Discovery had initially agreed to sell its film studio and streaming businesses to Netflix. Paramount later disrupted that agreement by launching a hostile takeover effort and revising its offer.
Netflix ultimately abandoned its deal, leaving Paramount with an agreement to purchase all of Warner Bros. Discovery for $31 per share.
Lawmakers in the United States and Europe subsequently scrutinized the transaction, including the foreign financing involved in Paramount’s bid.
The acquisition has also renewed attention on the Ellison family’s relationship with Trump. Larry Ellison is a friend of the president, and David Ellison attended a CBS News dinner in Washington in April where he sat with Trump and Paramount Chief Legal Officer Makan Delrahim.
Acting Attorney General Todd Blanche was also present at the event, which was held while the Justice Department was still reviewing the merger.
Paramount has expanded its legal team in preparation for a possible court battle. Its hires include Jeffrey Kessler, the Winston Taylor attorney who represented the states in their successful Live Nation case, and Paul Clement of Clement and Murphy, who is known for arguing cases before the Supreme Court.
Moumita Basuroychowdhury is a Contributing Reporter at The National Digest. After earning an economics degree at Cornell University, she moved to NYC to pursue her MFA in creative writing. She enjoys reporting on science, business and culture news. You can reach her at moumita.b@thenationaldigest.com.
