A total of twelve US states have sued to block Paramount Skydance’s $110 billion (€96.2 billion) acquisition of Warner Bros. Discovery — the largest-ever merger in Hollywood — arguing that the deal would hurt competition and raise prices in film and television.
The California-led legal action — filed in Oakland federal court on Monday — challenges Paramount CEO David Ellison’s ambitions to transform his media company into a major rival of Netflix and Disney.
The lawsuit comes after the transaction was green-lighted by the US Justice Department (DOJ) without conditions. The DOJ said the acquisition was unlikely to harm competition or consumers.
California Attorney General Rob Bonta — who is leading the case — called the merger of two of Hollywood’s last five legacy studios “unlawful” and stressed that it would result in “higher prices, lower quality, and less content” for audiences.
“Audiences on every sofa and in every movie (theater) seat would feel the impact of this unlawful merger,” Bonta said as he addressed a news conference.
What do you need to know about Paramount-Warner merger?
- The takeover negotiations for Warner Bros Discovery marked one of the biggest media bidding battles in a generation. Netflix dropped out of the pursuit, clearing the way for Paramount to win with a $31-a-share offer.
- The acquisition would bring together two major Hollywood studios and two streaming platforms, HBO Max and Paramount+.
- It would place CNN and CBS News under one ownership umbrella. Critics are concerned that CNN’s editorial independence could be weakened under Paramount’s ownership.
- US lawmakers and entertainment trade groups say that Warner’s buyout would lead to a further consolidation of power in an industry helmed by only a handful of major players.
- They fear such a merger would result in job cuts, less diversity in filmmaking and more setbacks for consumers who are already facing increasing costs of streaming subscriptions.
- Paramount and Warner are looking to close their deal sometime in the third quarter of this year and have recently signalled efforts to complete the process in the coming weeks. The states’ lawsuit could impede those plans.
‘Media behemoth’
Monday’s suit argues that the tie-up would violate antitrust law.
“After this merger, for every dollar generated by wide-release theatrical films and basic cable channels in this country, the combined company will pocket more than a quarter,” the states said in the lawsuit.
They asserted that the deal would create a “media behemoth.”
Paramount sees the lawsuit as distorting settled antitrust law and as a misrepresentation of competition in the entertainment industry.
Reacting to the suit, Paramount on Monday said that the combination of the two film distributors would instead create a “stronger competitor against dominant streaming and technology platforms who have harmed the market for theatrical exhibition and jobs in the entertainment industry.”
The buyout is also undergoing antitrust reviews outside the US, including in Europe.
Politics over mammoth Hollywood merger
In the coalition with Bonta against the Paramount-Warner union are the attorney generals of Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington — all Democrats.
Critics of the merger have said Paramount’s political connections facilitated a smooth road to the June clearance by the US Department of Justice.
Paramount CEO Ellison’s father is billionaire Oracle co-founder Larry Ellison, who is a close ally of President Donald Trump and a major donor to the Republican leader’s political campaigns.
“Something happened and perhaps that something had to do with a mega-billionaire named Ellison,” Arizona Attorney General Kris Mayes told the media on Monday.
“We are seeing more and more instances where the Trump DOJ is just rolling over for corporate consolidation,” she added.
Bonta accused Trump of being “pro-rigged economy”.
There was no immediate statement from the White House.
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Edited by: Dmytro Hubenko
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