A coalition of 12 US states has launched a lawsuit seeking to block the proposed £87 billion ($110 billion) merger between Paramount and Warner Bros. Discovery (WBD). The attorneys general, led by California’s Rob Bonta, contend that the acquisition would violate US antitrust laws by substantially reducing competition within the entertainment industry, ultimately harming movie theatres, basic cable distributors, and audiences.
The legal challenge centres on the Clayton Act, which prohibits mergers that could significantly lessen competition or create a monopoly. The states specifically allege that the deal would stifle competition in three key areas: wide-release theatrical film distribution, the distribution of top-grossing theatrical films, and basic cable licensing. If the merger proceeds, it would combine two major film studios, streaming services Paramount+ and HBO Max, and a vast portfolio of television networks including Paramount’s CBS and MTV with WBD’s CNN and HBO.
The attorneys general argue that the combined entity would wield considerable control over the US entertainment landscape. They claim it would command approximately 27% of the US film distribution market, 30% of blockbuster movie distribution, and 27% of the basic cable channel market. This level of consolidation, they suggest, could lead to higher prices for consumers and fewer opportunities for diverse storytelling.
California Attorney General Rob Bonta emphasised the potential broader implications, stating that such consolidation could lead to increased prices and a reduction in diverse narratives reaching audiences. He underscored the importance of maintaining free and fair markets, asserting that no entity is above the law in the US economy. The lawsuit involves states including Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.
Despite the legal challenge, the proposed acquisition had previously received approval from WBD shareholders in April and was cleared by the US Department of Justice, which concluded it was unlikely to harm competition or consumers. Paramount CEO David Ellison had indicated in May that the transaction was on track to conclude by September of this year, suggesting the companies anticipated a relatively smooth path forward until this latest legal intervention.