A dozen state attorneys general have filed an antitrust lawsuit aiming to block Paramount’s $110 billion acquisition of Warner Bros. Discovery (WBD). The lawsuit was filed in the US District Court for the Northern District of California and follows the Department of Justice’s approval of the merger in June.
The attorneys general from Arizona, California, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington allege that the merger violates the Clayton Act by reducing competition in various sectors, including the distribution of wide-release theatrical films and basic cable channels. The suit does not specifically address the potential impact on the streaming market.
California Attorney General Rob Bonta stated that the merger would lead to higher prices, lower quality, and less content for audiences. Bonta’s office noted that a combined Paramount and WBD would hold a 27 percent share of the wide-release theatrical distribution market and three-tenths of anticipated top-grossing films.
In addition, the two companies would encompass a 27 percent share of the basic cable channel distribution market, with WBD as the second-largest player and Paramount in third place. The lawsuit asserts that such consolidation would harm competition across multiple lines of commerce.
A spokesperson for Paramount criticized the lawsuit, arguing it reflects a flawed understanding of antitrust laws and stated, “We will vigorously defend the transaction and demonstrate that this challenge is inconsistent with sound competition policy.” Paramount emphasized that the merger would enhance competition and consumer choice.
Paramount CEO David Ellison indicated that the merged entity would produce at least 30 films annually, claiming significant benefits to consumers. The company further asserted that the merger would strengthen its position in the streaming market, where WBD has over 140 million global subscribers and Paramount+ has 79.6 million.
The state attorneys general plan to seek an injunction to prevent the merger from closing. Paramount and WBD also require regulatory approval in other markets. The European Union has noted that Paramount must make certain concessions for approval, with a provisional decision deadline set for July 22. The UK’s Competition and Markets Authority is currently investigating the merger.
