Concerns Over New Jersey’s Attorney General Joining Lawsuit Against Paramount’s Merger
A source affiliated with Democratic New Jersey Governor Mikie Sherrill expressed criticism of the state’s Democratic Attorney General, Jennifer Davenport, for her decision to participate in a lawsuit aimed at blocking Paramount Skydance’s $110 billion acquisition of Warner Bros. Discovery. The source informed the Daily Caller News Foundation that the governor’s team was not informed beforehand about this significant move.
“We didn’t have a heads-up,” the source said, questioning the validity of the case. They described New Jersey’s involvement as “a baffling move,” especially at a time when the state is negotiating for investment and job opportunities with the two entertainment giants.
“I mean, did we really need to get involved when we’re working on such beneficial agreements for our taxpayers with Paramount and Warner Brothers?” the source pondered.
According to the New Jersey Economic Development Authority, 556 productions were filmed in the state in 2024, generating a record $833 million and employing over 30,000 crew members. The state has also extended its Film and Digital Media Tax Credit Program through 2049 in hopes of attracting studios and securing long-term investment in entertainment.
The source close to the governor remarked, “If every single regulator has given the green light… this doesn’t appear to be a compelling case.”
State Senators Raj Mukherji, Brian Stack, Angela McKnight, Hudson County Executive Craig Guy, and several other Democratic leaders have urged Davenport to withdraw New Jersey from the lawsuit. They emphasized that there should be a “compelling reason” to allocate taxpayer funds for litigation that could put investment opportunities at risk in the state.
Davenport joined a coalition that includes California’s Attorney General Rob Bonta and ten other states in July, arguing that the merger would reduce competition by combining two major studios and basic cable companies. This, they claim, might lead to higher prices and fewer choices for consumers.
Davenport’s office declined to comment on the matter to the DCNF due to the ongoing litigation.
The source suggested that those involved are increasingly anticipating the likelihood of a settlement instead of prolonged legal battles. “Joining that California charade,” they said, “doesn’t represent anyone else in the state.”
Meanwhile, the Justice Department (DOJ) cleared the merger after an extensive eight-month review that involved examining over 2 million documents from upwards of 80 custodians. The investigation included input from state attorneys general, who participated after confidentiality restrictions were lifted to facilitate information sharing.
Ultimately, the DOJ found that the merger was “not likely to harm competition or American consumers” in areas like streaming, linear television, or theatrical film production and distribution.
Ashley Baker, executive director of the Committee for Justice, indicated that the federal review could pose challenges for the states’ case, given that state officials had access to much of the evidence available to federal antitrust officials.
“The states were not outsiders to the federal review,” Baker pointed out. “Their attorneys were part of the Antitrust Division’s investigation and participated in depositions.”
Baker elaborated that the states had access to the same extensive material that the DOJ examined, stating, “The Division concluded that the deal was unlikely to harm competition and closed without conditions.”
According to their complaint, the states contended that the merged company would hold about 27% of wide-release theatrical distribution and a similar percentage in basic cable. However, Baker argued that having a certain market share does not automatically equate to consumer harm.
“The strongest argument the states have is numerical evidence, not substantive proof,” Baker commented. “But merely having a share does not indicate harm.”
The DOJ also expressed skepticism about relying solely on historical market shares, referring to Supreme Court precedents in its investigation closure.
Baker added that the litigation’s process could impose significant costs on workers and the entertainment sector, regardless of whether the states win in court.
“Ultimately, the process itself becomes a penalty,” Baker noted. “The state doesn’t need to be victorious at trial to impose repercussions; it only has to wait.”
In light of these developments, Paramount has asked a federal judge to mandate that the 12 states involved in the challenge and the Writers Guild of America post a $1.88 billion bond to cover potential losses resulting from delaying the merger. Paramount warned that if the deal remains unresolved by September 30, it would incur approximately $7 million daily in “ticking fees,” which could total around $1.3 billion by the time of the trial’s conclusion. A hearing regarding this bond request was scheduled for September 24, according to reports.
