California and 11 other states filed an antitrust lawsuit on July 13 against the Paramount Skydance and Warner Bros. Discovery merger, asking the court to permanently block the $110 billion deal.
California Attorney General Rob Bonta claims that the acquisition would extinguish competition, drive up prices, lower content quality, and result in fewer movies and television shows.
“[Paramount Skydance CEO] David Ellison may think this is an offer we can’t refuse,” Bonta told reporters while standing in Griffith Park, with the iconic Hollywood sign behind him. “But I’m here to say, he’s wrong.”
A coalition of Democratic attorneys general joined the lawsuit from Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington state.
Paramount responded to the lawsuit, calling it a “misrepresentation of competition in the entertainment industry today.”
“The lawsuit filed by the state attorneys general, in the most generous light, reflects a fundamentally flawed application of the antitrust laws and is wrong on both the facts and the law,” a Paramount spokesperson said in a statement provided to The Epoch Times.
“We will vigorously defend the transaction and demonstrate that this challenge is inconsistent with sound competition policy and the competitive realities of the media marketplace. Delaying this transaction will only harm entertainment workers who have already suffered over recent years as technology has disrupted their livelihood and cost California tens of thousands of entertainment jobs.”
Paramount said the merger would create “a stronger, well-capitalized, creative-first media company that is better positioned to compete with companies like Netflix that have come to dominate the industry of audiences, premium content, and creative talent.”
The states allege that the deal is illegal under the Clayton Antitrust Act, a 100-year-old law that prevents mergers that tend to create a monopoly. The combined company would control nearly one-third of theatrical motion pictures and one-third of cable programming, including 50 of the most popular cable channels, Bonta said.
This merger would give the company more than 30 percent of blockbuster movies, and four distributors would control more than 90 percent of blockbusters, he claimed.
Bonta said antitrust cases generally take about $20 million and 20 attorneys to fight. He noted that the coalition is hiring outside counsel—the Milbank firm based in New York City—to help them with the case against the merger.
“This is a place where we need the firepower, the resources, the ability to advance this case on behalf of consumers, a free marketplace, the rule of law, and in this case … we felt it was prudent and appropriate to engage outside counsel, and we have,” Bonta told reporters.
Paramount said the company planned to continue to fight against any attempt to derail the deal.
The merger has cleared several major regulatory hurdles in the United States and internationally.
The Federal Communications Commission is still reviewing the acquisition, specifically the possibility of foreign government investments in local CBS stations owned by Paramount. Wealth funds from Saudi Arabia, Qatar, and the United Arab Emirates are involved in funding a company that controls those stations.
