California Attorney General Rob Bonta filed a lawsuit to block the proposed merger between Paramount and Warner Bros. Discovery, citing concerns over reduced competition in film distribution and cable television licensing.
The lawsuit highlights California's increasing assertiveness in using antitrust powers to influence major corporate mergers, potentially impacting the structure of the entertainment industry and employment within the state.
California Attorney General Rob Bonta has initiated legal action to prevent the merger of Paramount and Warner Bros. Discovery, asserting that the consolidation would significantly diminish competition within the film distribution and basic cable television markets.
In a statement, Bonta's office indicated that the combined entity would control approximately one-third of theatrical motion pictures and nearly one-third of basic cable programming. The attorney general emphasized that the decision to file the lawsuit was based on a thorough review of the facts and law, aiming to protect consumers from potential negative impacts on price, quality, competition, and choice.
The legal challenge is expected to be costly, with Bonta's office estimating expenses of $20 million and requiring a team of 20 attorneys, supplemented by outside counsel. This move aligns with a precedent set in California, where state attorneys general have previously used merger challenges to secure concessions from companies. For instance, during the Trump administration, California was part of a coalition that sued to block the T-Mobile and Sprint merger, ultimately leading to a settlement that included assurances regarding retail jobs in the state.
Experts suggest that the litigation could result in a settlement where Paramount agrees to certain concessions, such as commitments to avoid layoffs or to divest specific assets. The lawsuit's filing comes amid predictions from Hollywood observers that a merger could lead to fewer opportunities for creative workers and significant job losses.
Jennifer Dixton, a former assistant chief at the Justice Department's antitrust division, noted that California has been actively building its antitrust expertise by hiring experienced attorneys, including those from federal agencies.