A coalition of 12 states, led by California Attorney General Rob Bonta, filed a lawsuit on Monday seeking to block Paramount Skydance’s proposed $111 billion acquisition of Warner Bros. Discovery, arguing that the merger would substantially reduce competition across the entertainment industry.
The lawsuit claims that the merger violates the Clayton Act by giving the combined company too much influence in the theatrical film distribution and basic cable television markets.
Paramount and Warner Bros. are two of the five major studios, alongside Disney, Universal, and Sony Pictures. According to the lawsuit, those five companies already account for 86% of theatrical film distribution and 90% of blockbuster releases. Warner Bros. and Paramount are also major players in television, ranking second and third, respectively, among basic cable distributors.
State officials argue that combining two of the industry’s major studios would further concentrate market power. They claim the merged company would control approximately 27% of the wide-release theatrical distribution market, 30% of the blockbuster film market, and 27% of the basic cable licensing market, reducing competition for movie theaters, cable providers, and consumers and leading to higher prices, fewer entertainment choices, and lower-quality content.
If completed, the merger would create one of the world’s largest entertainment companies, combining major film and television assets under a single corporate umbrella. In addition to Paramount’s existing streaming platforms, the company would also own HBO Max and oversee a large portfolio of cable networks, including HBO, TBS, Nickelodeon, HGTV, Animal Planet, Food Network, and Comedy Central.
Paramount has defended the transaction, maintaining that the merger would strengthen its ability to compete with streaming giants such as Netflix, Amazon, and Disney. Company executives have repeatedly said the combined business plans to release at least 30 theatrical films each year. According to a report from Semafor, Paramount is also reportedly considering leaving California in response to Bonta’s legal challenge.
The lawsuit comes after the Department of Justice’s approval of the merger in June under the Trump administration, arguing that the deal would not harm competition. The agency’s decision drew scrutiny because of Paramount CEO David Ellison and his father Larry Ellison’s close ties to President Trump. Meanwhile, several labor unions representing entertainment workers have voiced concerns that continued consolidation in Hollywood could lead to job losses throughout the industry.
The states are expected to seek an injunction to prevent the merger from closing. Paramount has indicated it expects the transaction to be completed sometime after July 22.
The coalition bringing the lawsuit includes Arizona, California, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.
Featured image: Ethan Swope/Bloomberg/Getty Images
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