Key facts
- Twelve states, led by California, have sued to block the $111 billion merger of Paramount and Warner Bros. Discovery.
- The states allege the merger violates antitrust laws, citing reduced competition in film releases and basic cable.
- The lawsuit claims the deal will result in higher prices, lower quality, and less content for consumers.
- The US Justice Department had previously approved the merger, a decision that reportedly surprised its own staff lawyers.
- Paramount contends the merger will not harm competition and is engaging with remaining regulators.
A coalition of 12 states, led by California, has filed a lawsuit to block the $111 billion merger between Paramount and Warner Bros. Discovery, a deal that had previously received approval from the Trump administration.
The states, including Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington, argue that the merger violates the Clayton Act by substantially reducing competition in the markets for theatrical film releases and basic cable channel licensing.
California Attorney General Rob Bonta stated that the merger would lead to "higher prices, lower quality, and less content for film and television," harming movie theaters, cable distributors, and audiences. The lawsuit specifically points out that the combined company would control over 85 percent of wide-release theatrical films and 59 percent of basic cable channels.
The states also challenged the companies' public commitment to release at least 30 films annually, calling it an "empty commitment" that is not legally enforceable and does not address the harms to competition in basic cable programming. They noted that Warner Bros. has fallen short of its previous film release commitments.
Furthermore, the lawsuit alleges that the merger would grant Paramount excessive control over the TV programming market, allowing it to leverage this power against distributors and potentially pass higher costs onto subscribers. Public Knowledge legal director John Bergmayer criticized the Justice Department's approval, stating that state attorneys general are now performing the role the DOJ neglected.
The US Justice Department had approved the merger on June 12, concluding it would not harm competition or consumers, a decision that reportedly surprised its own investigating staff lawyers. Paramount has expressed confidence that the transaction raises no antitrust concerns and is prepared to address any legitimate issues, noting that numerous antitrust authorities globally have already cleared the deal.