12 states sue Paramount over Warner takeover, say merger ‘would kill competition’
Twelve states sued to block Paramount from taking over Warner Bros. Discovery on Monday, said the US $81 billion merger would “kill competition” in Hollywood and lead to fewer choices for consumers across the US.
“Audiences on every sofa and in every movie [theatre] The seat will feel the impact of this illegal merger,” said California Attorney General Rob Bonta, who is leading the case, in a press conference from Los Angeles.
He said the deal would lead to higher prices, fewer movies and TV shows and lower quality content overall.
The Paramount-Warner combination would combine the last two of Hollywood’s five legacy studios. It would also mean putting Warner’s HBO Max, libraries full of fan favorites like him Harry Potter even CNN under the same roof of Paramount-owned CBS and the Paramount+ streaming service.
In Monday’s complaint, the states said such a tie-up would be “extremely detrimental” to theaters and cable distributors. Bonta’s office said the states are asking Warner and Paramount not to block the merger “until the judicial process is completed.” And if the companies do not agree, the union then files a temporary restraining order.
Paramount said Monday’s lawsuit “distorts antitrust law” and insisted the merger would create “a powerful challenger against dominant broadcast platforms and technologies that have harmed the theater market and jobs in the entertainment industry.”
The company, which was bought by Skydance last year, vowed to “vigorously defend” the transaction.
Warner deferred to Paramount for comment. Beyond California, states joining Monday’s lawsuit include Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.
Where the takeover stops
Monday’s antitrust lawsuit comes at an important time for the Paramount-Warner transaction – which, after months of a public bidding war with Netflix, received the stamp of approval from shareholders in April and the blessing from the administration of US President Donald Trump last month.
Paramount Skydance has launched an aggressive $108.4 billion US bid for Warner Bros. Discovery on Monday challenged the Netflix deal in a last-ditch effort to build a media network that could challenge the giant’s dominance.
The companies had hoped to close their deal in the third quarter of this year, and have recently indicated an effort to complete the process in the coming weeks. A federal lawsuit may challenge those plans, at least for now.
The clock is ticking. Paramount also promised to offer shareholders some compensation if that process is not completed by Sept. 30 – in the form of a “mark-up fee” of 25% of the share for the entire quarter past that date. It also agreed to a $7 billion termination fee.
Paramount revealed additional regulatory approvals it says it has received in several other countries, including China, Canada and Australia. Meanwhile, other reviews are underway, including with the European Union and the UK – which have separately suggested they could intervene.
Including debt, Paramount’s proposed purchase of Warner is valued at approximately $111 billion (or $31 per share) based on outstanding shares.
Critics criticize the merger
Warner and Paramount argue that the merger will be good for industry growth and give consumers access to more content, especially if the HBO Max and Paramount+ libraries are combined. But critics have criticized what further consolidation would mean in an industry already dominated by a few big players.
Monday’s lawsuit from the states noted that a combined Paramount-Warner would control about a third of both the market for theatrical film distribution and basic cable programming.
Such a combination would create “a giant corporation with unprecedented power and influence in news and entertainment around the world,” said New York Attorney General Letitia James, who is among those challenging the deal.
Aside from the consumer implications, he also said the merger “will put jobs and businesses across the country at risk.”
Thousands of actors, directors, writers and other industry professionals have already expressed “unwavering opposition” to the deal.
Monday’s challenge drew applause from groups like the Writers Guild of America, which warned that the merger would lead to “job cuts, lower wages for entertainment workers, reduced diversity, and higher prices for consumers.”
Paramount argued Monday that delaying the merger “will only hurt entertainment workers who have already suffered in recent years as technology has disrupted their livelihoods.”
The company added that the federal lawsuit would “protect” major streaming rivals like Netflix from meaningful competition.
Political questions
Throughout Paramount’s pursuit of Warner, questions of political influence have also piled up — criticism falling largely across party lines in Washington. No Republicans signed the state bill on Monday.
Several attorneys who joined Monday’s lawsuit took aim at the Justice Department’s decision not to oppose the deal — pointing in particular to the president’s close relationship with the family of billionaire Paramount CEO David Ellison.
Last month, the leadership of the DOJ issued a long statement in support of the agreement – keeping the Paramount-Warner combo “will increase competition in all media and entertainment, with benefits for consumers and American workers.”
Many eyes are on CNN, a network that has long drawn the ire of Trump and his allies.
Many Trump administration officials have not been shy about sharing their hopes for CNN under top ownership, with Defense Secretary Pete Hegseth telling reporters in March that “the sooner David Ellison takes over that network, the better.”
