A coalition of 12 state attorneys general has sued to block Paramount Skydance’s proposed acquisition of Warner Bros. Discovery, arguing that the deal would harm movie theaters, cable distributors and audiences. The lawsuit, led by California Attorney General Rob Bonta, says the merger would violate the Clayton Act by reducing competition in film distribution and basic cable licensing.
The coalition includes California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington. The case was filed in the U.S. District Court for the Northern District of California.
The deal would combine two major Hollywood studios and bring together streaming platforms Paramount+ and HBO Max. It would also create a large television network portfolio that includes CBS, MTV, CNN and HBO.
States Say the Deal Would Reduce Competition
The attorneys general argue that the merger would reduce competition in three markets: wide-release theatrical film distribution, top-grossing theatrical film distribution and basic cable channel licensing. They say the combined company would control about 27% of U.S. wide-release film distribution, 30% of blockbuster film distribution and 27% of the basic cable channel market.
Bonta said the merger would not only lead to higher prices, but also fewer opportunities for important stories to be made and distributed. He said the states are challenging the deal to protect free and fair markets.
The lawsuit reflects concerns already raised by filmmakers, actors and other industry professionals. Critics say the merger would further consolidate the U.S. entertainment industry and reduce the number of buyers for scripts, projects and creative work.
Paramount has rejected those concerns. The company has argued that the combined film studios would release about 30 movies a year and compete more effectively against large technology and streaming companies.
Deal Has Already Cleared Federal Antitrust Review
The legal challenge comes after the U.S. Department of Justice cleared the transaction. Reuters reported that the Justice Department’s Antitrust Division spent eight months reviewing the deal and concluded it was unlikely to harm competition or consumers.
Warner Bros. Discovery shareholders approved the transaction in April. Paramount chief executive David Ellison said in May that the company expected the deal to close by September.
The state lawsuit could complicate that timeline. Reuters reported that Paramount may owe Warner Bros. Discovery shareholders a quarterly ticking fee if the deal is not completed by the end of September.
The merger still faces broader scrutiny from regulators, industry groups and entertainment workers. Cinema United, the trade group representing movie theater owners, has supported the states’ challenge, arguing that the deal could give the combined company more leverage over theaters.
If completed, the transaction would reshape Hollywood’s studio landscape by reducing the number of major legacy distributors. The states say that would give the combined company too much influence over what films reach theaters, what cable channels distributors must carry and what audiences ultimately get to watch.
Featured image credits: Wikimedia Commons
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