A total of twelve US states have filed a lawsuit to block Paramount Skydance’s $110 billion (€96.2 billion) acquisition of Warner Bros. Discovery – the largest merger ever in Hollywood – arguing that the deal would harm competition and raise prices in film and television.
The California-led legal action – filed in Oakland federal court on Monday – challenges Paramount CEO David Ellison’s ambitions to transform his media company into a major rival to Netflix and Disney.
The lawsuit comes after the US Department of Justice (DOJ) gave the green light to the transaction without any conditions. The DOJ said the acquisition was unlikely to harm competition or consumers.
California Attorney General Rob Bonta – who is leading the case – called the merger of two of Hollywood’s last five legacy studios “unlawful” and insisted it would result in “higher prices, less quality and less content” for audiences.
“The audience sitting on every sofa and every movie (theatre) seat will feel the impact of this illegal merger,” Bonta said while addressing a press conference.
What you need to know about the Paramount-Warner merger?
- The negotiations to acquire Warner Bros. Discovery were one of the largest media bidding battles in a generation. Netflix abandoned pursuit, clearing the way for Paramount to win with an offer of $31 per share.
- The acquisition will bring together two major Hollywood studios and two streaming platforms, HBO Max and Paramount+.
- This would put CNN and CBS News under one ownership umbrella. Critics worry that CNN’s editorial independence may be weakened under Paramount ownership.
- US lawmakers and entertainment trade groups say Warner’s purchase would lead to consolidation of power in an industry previously run by only a few major players.
- They fear such a merger would cut jobs, reduce diversity in film production and be more of a blow to consumers who are already facing the rising costs of streaming subscriptions.
- Paramount and Warner are looking to close their deal in the third quarter of this year and recently signaled efforts to complete the process in the coming weeks. The states’ lawsuit could hinder those plans.
‘Media giant’
Monday’s lawsuit argues the tie-up would violate antitrust laws.
“After this merger, for every dollar generated by wide-release theatrical films and basic cable channels in this country, the combined company will pay more than a quarter,” the states said in the lawsuit.
He emphasized that the deal would create a “media giant”.
Paramount views the lawsuit as a distortion of established antitrust law and a misinterpretation of competition in the entertainment industry.
Responding to the lawsuit, Paramount said Monday that the combination of the two film distributors “will create a stronger competitor against the major streaming and technology platforms that have harmed the market for theatrical screenings and jobs in the entertainment industry.”
The buyout is also undergoing antitrust review outside the US, including Europe.
Politics on Hollywood’s mega merger
In coalition with Bonta against the Paramount-Warner union are the attorneys general of Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington – all Democrats.
Critics of the merger have said that Paramount’s political ties may have facilitated an easier path to June approval by the US Justice Department.
Paramount CEO Ellison’s father is billionaire Oracle co-founder Larry Ellison, a close ally of President Donald Trump and a major donor to the Republican leader’s political campaigns.
“Something happened and it probably had something to do with a mega-billionaire named Ellison,” Arizona Attorney General Chris Mayes told the media on Monday.
“We’re seeing more and more examples where the Trump DOJ is pushing for corporate consolidation,” he said.
Bonta accused Trump of being a “rigged economy supporter”.
There was no immediate statement from the White House.
Edited by: Dmytro Lyubenko
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