12 U.S. states sue over Paramount-Warner merger, cite competition concerns

A coalition of twelve U.S. states is taking legal action to prevent the $81 billion merger between Paramount and Warner Bros. Discovery. Filed on Monday, the lawsuit argues that the combination would stifle competition within Hollywood, ultimately limiting consumer choices and potentially increasing prices for content. California Attorney General Rob Bonta, leading the case, stated that audiences would feel the impact of this "unlawful merger" through fewer movies and TV shows and a decline in content quality.

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Audiences on every sofa and in every movie (theatre) seat would feel the impact of this unlawful merger.

The proposed deal would unite two of Hollywood's remaining legacy studios, bringing Warner's extensive libraries, including franchises like Harry Potter, and its streaming service HBO Max under the same umbrella as Paramount's CBS and Paramount+ service. The states' complaint also asserts that the merger would significantly harm movie theaters and cable distributors. They are seeking to halt the merger's finalization until a judicial review concludes, with the possibility of filing a temporary restraining order if necessary.

Paramount has pushed back against the lawsuit, calling it a distortion of antitrust law. The company argues that the merger will actually foster a more competitive landscape, particularly against dominant streaming and technology companies that have negatively impacted the theatrical exhibition market and entertainment industry jobs. Paramount, which was acquired by Skydance last year, has vowed to defend the transaction vigorously. Warner Bros. Discovery deferred comment to Paramount.

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distorts settled antitrust law

The legal challenge arrives at a critical juncture for the transaction, which received shareholder approval in April and a blessing from the Trump administration last month. Paramount and Warner Bros. Discovery had aimed to close the deal in the third quarter of this year, potentially within the coming weeks. The states' lawsuit, however, could significantly delay these plans. Paramount has offered a "ticking fee" to shareholders if the deal isn't completed by September 30, and has agreed to a $7 billion regulatory termination fee.

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stronger competitor against dominant streaming and technology platforms who have harmed the market for theatrical exhibition and jobs in the entertainment industry.