A coalition of state attorneys general filed suit Tuesday to block Paramount's $110 billion acquisition of Warner Bros. Discovery, opening a new legal front against the entertainment mega-deal even after federal regulators gave it the green light in June.
The lawsuit, led by California, New York, and Washington along with ten other states, challenges the merger on grounds that it would concentrate too much power in the hands of too few studios. The states asked both companies to hold off on closing the transaction while the case proceeds and said they would seek a temporary restraining order.
California Attorney General Rob Bonta framed the stakes in stark terms. "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 U.S.," Bonta said.
The states identified three specific competitive problems. They contend that after the merger, just three distributors would control 75 percent of wide-release theatrical films, with four major studios controlling 86 percent. In top-grossing theatrical releases, the merged company would alone command more than 30 percent, with four studios controlling over 90 percent combined. On the cable side, combining Warner Bros. as the second-largest cable distributor with Paramount as the third would give them a combined 27 percent share of that market.
The lawsuit adds fuel to a broader pushback from entertainment unions and cinema advocates. The Writers Guild of America West and Writers Guild of America East issued a joint statement backing the state action, with WGAW President Michele Mulroney calling it "one of the worst proposed mergers we've seen." The theater industry group Cinema United also supported the filing, warning that "further movie studio consolidation will be significant and lasting, not just in Hollywood, but on Main Streets across this nation where local movie theaters serve as cultural and financial cornerstones."
Paramount pushed back hard, calling the lawsuit a misreading of antitrust law and competition in entertainment today. The company argued the deal creates a stronger rival against dominant streaming and technology platforms that have already damaged theatrical exhibition and entertainment jobs. A Paramount spokesperson warned that delays would only hurt workers already battered by industry disruption. "This transaction will only harm entertainment workers who have already suffered over recent years," the statement said.
The Justice Department's June approval was largely expected, but scrutiny has continued overseas. The UK Competition and Markets Authority announced last month it will formally investigate the deal. European regulators appear more receptive to approval if Paramount agrees to divestitures, and the company has signaled willingness to sell some children's TV network assets to secure EU clearance.
The state lawsuit reflects a growing willingness among attorneys general to challenge major deals where they believe federal regulators have fallen short. Earlier this year, a multistate coalition pursued antitrust claims against Live Nation and Ticketmaster despite the Justice Department's settlement, ultimately winning jury approval for breaking up the combined company. States also sued separately to block a Nexstar-Tegna merger that federal agencies had cleared, and a federal judge blocked that deal pending resolution of the state case.
Author James Rodriguez: "States are now the real antitrust cops, and the Paramount-WBD challenge shows they're ready to force the fight when Washington won't."
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