Key facts
- California and 11 other states are suing to block the $110 billion acquisition of Warner Bros. Discovery by Paramount Skydance Corporation.
- The lawsuit alleges the merger would substantially lessen competition in theatrical film distribution and basic cable programming.
- Plaintiffs claim the combined entity would control nearly one-third of theatrical motion pictures and basic cable programming in the U.S.
- The suit asserts violations of Section 7 of the Clayton Act, which prohibits mergers that lessen competition or tend to create a monopoly.
- The states are seeking to prevent the merger from closing until the judicial process is complete.
California, along with 11 other states, has filed a lawsuit to block the proposed $110 billion acquisition of Warner Bros. Discovery by Paramount Skydance Corporation. The coalition of attorneys general alleges that the merger would create an entertainment behemoth that would stifle competition, leading to higher prices, lower quality content, and fewer opportunities for diverse storytelling.
Led by California Attorney General Rob Bonta, the lawsuit contends that the combination of two of the five major film distributors and two of the five major basic cable channel owners would substantially lessen competition. The filing, lodged in the U.S. District Court for the Northern District of California, asserts violations of Section 7 of the Clayton Act. Specifically, the states argue that the merged entity would control approximately 27% of the wide-release theatrical film distribution market, and after the merger, only three distributors would control 75% of these films, with four distributors controlling 86%.
In the submarket of anticipated top-grossing theatrical films, the defendants would control over 30% post-merger. The attorneys general also highlighted the potential impact on basic cable programming, where the combined company would hold nearly one-third of the market. Attorney General Bonta stated that the merger would harm movie theaters, basic cable distributors, and ultimately, audiences nationwide.
The coalition has requested that Warner Bros. and Paramount refrain from closing the merger until the legal process concludes, indicating they will seek a temporary restraining order if the companies do not agree.