LOS ANGELES—The proposed $110 billion merger between Warner Bros. Discovery and Paramount Skydance faces a new legal challenge with the filing of an antitrust lawsuit by 12 attorneys general.
The antitrust lawsuit alleges that the deal could reduce theatrical film production, harm movie theaters and give the combined company the power to raise programming prices for cable channels. All of the attorneys general are Democrats.
In response a spokesperson for Paramount derided the lawsuit as "a fundamentally flawed application of the antitrust laws" that "is wrong on both the facts and the law."
Paramount also defended the deal for creating a larger company that could better compete with Netflix and big tech companies.
"The practical effect of this lawsuit is to shield those dominant streaming platforms like Netflix and technology companies from much needed competition while preventing the significant benefits this transaction will deliver for consumers, creators, workers, and the broader Hollywood economy," Paramount said.
In the lawsuit, the 12 attorneys general argue that the proposed merger, the largest in Hollywood history, would combine two of Hollywood’s five major film distributors and two of the five major basic cable channel owners, extinguishing competition between Paramount and Warner Bros., and inflicting substantial harm on movie theaters, basic cable distributors and, ultimately, audiences nationwide. In the U.S. alone, if allowed to merge, the combined titan would control nearly one-third of theatrical motion pictures, and nearly one-third of basic cable programming.
In a statement, California attorney general Rob Bonta said “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…Consolidation here not only leads to higher prices — it also leads to fewer opportunities for important stories to come to life, and fewer ways for audiences to encounter stories, ideas, and perspectives beyond their own experiences.”
The lawsuit highlights growing antitrust activism by states in response to what they see as weak enforcement by the Trump administration. The Trump Department of Justice quickly approved the merger.
California and some of the other states involved in the Paramount/WBD suit are also involved in an antitrust Federal lawsuit in the Eastern District of California that has temporarily halted the Nexstar/Tegna merger. That lawsuit is scheduled to go to trial in July of 2027.
If this suit causes similar delays, it would be costly for Paramount, which has promised to pay shareholders $650 million for each quarter the deal is delayed beyond October.
In this lawsuit, attorney general Bonta leads a coalition of the attorneys general of Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington as plaintiffs.
In response to the suit, the Writers Guild of America applauded the attorneys general and said "The merger of two of the largest Hollywood studios will reduce competition in our industry, leading to fewer jobs, lower wages for entertainment workers, less variety of programming, and higher prices for consumers."
In its defense of the deal Paramount also noted that "We will vigorously defend the transaction and demonstrate that this challenge is inconsistent with sound competition policy and the competitive realities of the media marketplace. Delaying this transaction will only harm entertainment workers who have already suffered over recent years as technology has disrupted their livelihood and cost California tens of thousands of entertainment jobs."
"The combination of Paramount and WBD will create a stronger, well-capitalized, creative-first media company that is better positioned to compete with companies like Netflix that have come to dominate the industry for audiences, premium content, and creative talent.," the statement continued. "Put simply, any attempt to block this transaction undermines the very principles antitrust law is designed to promote: more competition, more choice for consumers, and more opportunities for creators and workers."
The full filing is available here.
