State Attorneys General Challenge Paramount’s Acquisition of Warner Bros.

A group of a dozen state attorneys general filed a lawsuit on Monday to oppose the acquisition of Warner Bros. Discovery by Paramount Skydance.

California Attorney General Rob Bonta alleges in the lawsuit that this merger would essentially combine two of Hollywood’s major film distributors, which could harm competition significantly. He argues it would negatively impact movie theaters, basic cable distributors, and ultimately, viewers across the nation. The states involved are asking for the merger to be paused until the legal proceedings are finished. If the companies don’t comply, the coalition plans to file for a temporary restraining order, as stated in a press release.

“I’m leading a coalition of states that’s challenging this merger and asking the court to block it,” Bonta mentioned in a statement. He expressed concerns that the merger would result in higher prices, lower-quality content, and reduced offerings for film and television, hurting both theaters and audiences.

Bonta noted that California’s film industry plays a significant role in American culture. It entertains families, features prominently in young people’s lives, and provides numerous jobs in the state. He emphasizes that such consolidation would not only drive up costs but also limit the diversity of stories told, affecting how audiences engage with various perspectives. “With this lawsuit, California and other states are advocating for fair markets, not distorted ones,” he added.

When asked for further commentary, Bonta’s office directed inquiries to Monday’s press release. Both Warner Bros. and Paramount did not provide immediate responses.

According to the lawsuit, the merger would merge two of the five major film distributors, leaving only four that control over 85% of wide-release theatrical films in the U.S. Additionally, it would combine two of the five owners of basic cable channels, leaving just two major players— the new entity and Disney— controlling 59% of basic cable. The lawsuit highlights that the combined company would capture a significant portion of revenues in these areas.

Moreover, the states argue that U.S. movie theaters would face detrimental consequences from the merger.

“With fewer distributors, theaters could end up paying a larger share of their earnings to the remaining companies,” the lawsuit suggests. This could result in more restrictions on discounts and complimentary tickets. Furthermore, theaters may see fewer new releases, as distributors would have reduced competition and thus less motivation to invest in innovative films.

The plaintiffs argue that no new market entrants or expansions from existing firms would replace the competition lost due to this merger.

The coalition opposing the merger, alongside California, includes Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.

The lawsuit asserts, “Nothing justifies these significant harms to competition.”

Back in June, the Justice Department’s Antitrust Division approved the acquisition of Warner Bros. Discovery by Paramount. Critics of the deal have raised concerns about potential layoffs, as reported by Politico.