A group of 12 states, led by California, has sued Paramount Skydance Corp. to block its $110 billion bid to acquire Warner Bros. Discovery Inc. The antitrust lawsuit, filed in California federal court, alleges that the blockbuster Hollywood deal would result in higher prices and fewer choices for consumers in movies and television. The states claim the merger would harm competition for film distribution and the licensing of cable TV channels, creating a "media behemoth" that would control more than a quarter of all revenue generated by wide-release theatrical films and basic cable channels in the U.S. Paramount has stated the lawsuit is "wrong on the facts and the law" and vows to defend the transaction vigorously.
The lawsuit argues that the deal would combine two of the five largest U.S. film studios, giving the combined entity control over 27% of the market for widely released theatrical films and more than 30% of anticipated blockbusters. Post-merger, only four companies—the new entity, Walt Disney Co., Universal, and Sony Pictures—would control over 90% of the blockbuster market. The lawsuit also targets the television market, stating the merger would combine the second and third-largest players, controlling more than 50 channels and 27% of viewership in cable and satellite television.
The legal challenge is expected to delay the merger past its Sept. 30 deadline, after which Paramount would incur significant daily "ticking fees" owed to Warner Bros. shareholders, amounting to $6.9 million per day or $650 million per quarter. While Paramount's David Ellison has pledged to produce 30 films annually for theatrical release and increase TV show output, the states consider this promise unenforceable, noting Warner Bros.' past failures to meet such targets. The merger has faced opposition from Democrats in Washington and Hollywood, concerned about job losses, higher production costs, and reduced audience choice, despite the Justice Department clearing the deal without conditions in June.
The states' lawsuit highlights concerns that the combined company, if the deal proceeds, would be controlled by David Ellison, son of Oracle Corp. co-founder Larry Ellison, and oversee major news networks like CBS and CNN, as well as two large streaming services, Paramount+ and HBO Max. California Attorney General Rob Bonta emphasized that the merger would "snuff out competition, drive up prices, diminish content quality and produce fewer movies and shows each year." Paramount, however, maintains that the merger would enable the company to invest more aggressively in premium content, theatrical releases, and creative talent.
