A coalition of US state attorneys general, spearheaded by California Attorney General Rob Bonta, is finalizing an antitrust lawsuit against Paramount's pending $111 billion acquisition of Warner Bros. Discovery. The lawsuit is expected to be filed as early as next week, though the exact timing is subject to change. This legal challenge poses a significant hurdle to what would be one of the largest media mergers in history, despite the Justice Department having cleared the deal last month.
The states' concerns center on the potential harm to competition across the entertainment and news industries. A draft of the lawsuit argues that the merger would particularly impact the market for "tent pole films"—expensive blockbusters that constitute a substantial portion of box office revenues. Critics, including actors, writers, and theater owners, fear the combined entity, which would include two major movie studios (Warner Bros. and Paramount Pictures), multiple streaming services, and news networks like CNN and CBS News, could lead to job losses, fewer film productions, and reduced consumer choice.
California has taken the lead in the investigation, with New York, Washington, and Connecticut among the states indicating their intent to join the effort. Paramount has already secured international approvals from more than 20 countries, including China and Australia, but still awaits some, such as Britain's. Paramount has consistently denied claims that the deal would harm competition, arguing that the increased scale is necessary to compete with streaming giants like Netflix and Amazon, and that cost savings would be reinvested into content.
Paramount aims to close the deal in the third quarter of the year and has committed to paying Warner Bros. Discovery shareholders approximately $650 million in cash for each quarter the deal is delayed beyond October. Larry Ellison, co-founder of Oracle, and his son David Ellison are behind the proposed merger. David Ellison has stated that the combined studios would release 30 movies annually. However, a court-ordered pause could delay the deal by months, exacerbating costs for Paramount, which anticipates accumulating around $80 billion in debt post-acquisition.
