A group of 12 states led by California sued Paramount Skydance and Warner Bros. Discovery today in an attempt to block a $111 billion merger that was greenlit by the Trump administration last month.
“The unlawful merger of these two entertainment behemoths would lead to higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately, audiences on every sofa and movie theater seat in the US,” California Attorney General Rob Bonta said.
The merger would combine two of the largest movie studios and merge streaming service Paramount+ with HBO Max. Netflix previously had a deal to buy WBD’s streaming and movie studios businesses, but Paramount succeeded in a hostile takeover bid helped along by support from the Trump administration.
The states trying to block the deal “asked Warner Bros. and Paramount not to close the merger until after the judicial process concludes, and if they do not agree, the coalition will be filing [a motion for] a temporary restraining order,” Bonta’s announcement of the lawsuit said.
Paramount gets help from Trump admin
A Semafor report yesterday said that Paramount is considering moving its corporate headquarters out of California in response to the state’s efforts to block the merger. Today’s lawsuit was filed by Arizona, California, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington. The case is in US District Court for the Northern District of California.
The US Justice Department approved the merger on June 12, saying it determined it will not harm competition or American consumers. The approval reportedly surprised DOJ staff lawyers who led the agency’s investigation into the deal and were leaning toward recommending a lawsuit to block it.
Paramount CEO David Ellison reportedly told Trump administration officials that he would make big changes at the Warner-owned CNN, a longtime target of President Trump’s wrath. Paramount previously won US approval to buy Skydance after agreeing to install what Federal Communications Commission Chairman Brendan Carr called a “bias monitor” at CBS.
Paramount last year also reached a $16 million settlement with Trump over his claim that 60 Minutes deceptively edited a Kamala Harris interview, despite CBS releasing transcripts and camera feeds that showed Trump’s claim was baseless. The settlement was widely seen as a quid pro quo, although both Paramount and the FCC denied the settlement and merger approval were connected.
30-movie promise called an “empty commitment”
In today’s lawsuit, states alleged that the deal violates the Clayton Act prohibition on mergers in which “the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.” The states say the merger is anticompetitive in the markets for theatrical film releases and licensing of basic cable channels.
“The merger combines two of the nation’s five major film distributors, leaving only four to control over 85 percent of all wide-release theatrical films in the United States,” the lawsuit said. “It combines two of the five major owners of basic cable channels, leaving only two (the combined company and Disney) to control 59 percent of all basic cable in the United States.”
The states’ lawsuit said the merging companies’ public commitment to release “at least 30 films annually” will not fix the harms caused by the deal. The promise is not legally enforceable and “fails to address the harms to competition in basic cable programming,” the lawsuit said.
Warner Bros. previously committed to create 16 theatrical films in 2023 and over 20 in 2024, but ended up releasing only 11 in 2023 and nine in 2024, the lawsuit said.
“Theaters, distributors, and the viewing public should not be forced to rely on Defendants’ empty commitments to protect them from the effects of an unlawful merger. They are better served if Paramount and Warner Bros. continue to compete for their business,” the lawsuit said.
States do the job DOJ “refused to do”
States further alleged that the merger will give Paramount too much control over the market for TV programming, and would be able to use that as leverage in bargaining with distributors:
A distributor who rejects the combined company’s fee demands would risk losing, for example, CNN for news viewers, Nickelodeon and Cartoon Network for family households, HGTV and Food Network for lifestyle audiences, and TNT and TBS for sports and entertainment viewers. Faced with this threat, distributors would likely be forced to accept higher fees to distribute basic cable channels than they would absent the proposed merger. Those higher fees will likely be passed on to their subscribers in the form of higher monthly bills.
John Bergmayer, legal director at advocacy group Public Knowledge, said that “state attorneys general are doing the job the Justice Department refused to do.” He said the merger “would give one company more power over what gets made, what theaters can show, what distributors must pay, and what audiences ultimately see and pay for,” leading to “fewer films, worse terms for theaters, higher ticket prices, higher cable bills, and less investment in programming.”
We contacted Paramount today and will update this article if it provides a response. Before the lawsuit was filed, Paramount told Deadline: “We continue to engage constructively with the remaining few regulators around the world still considering the merger, including state attorneys general, and are prepared to address any legitimate antitrust issues.”
Paramount also said it is “confident this transaction raises no such concerns, as demonstrated by the dozens of antitrust authorities around the world that have carefully reviewed the transaction and either cleared it or concluded that it does not violate applicable competition laws.”
