Paramount Prepares Legal Defense Against California Lawsuit

Paramount is gearing up to contest a lawsuit from California aimed at blocking its proposed $110 billion merger with Warner Bros. Discovery. The company asserts that the merger actually enhances competition in the industry.

In a statement, they said, “This lawsuit reflects a fundamentally flawed understanding of antitrust law that is incorrect both in fact and law.” They emphasize their intent to defend the deal vigorously, arguing that this legal challenge misaligns with healthy competition policy and the realities of the media market.

The lawsuit, led by California Attorney General Rob Bonta and a coalition of 12 Democratic attorneys general, came early today. They are seeking to impede the massive merger, which is touted to reshape the entertainment landscape.

Paramount added that halting the merger would negatively affect entertainment workers who have already faced considerable disruption due to changes in the industry, particularly as technology companies have transformed the market, leading to job losses in California.

The company believes that the merger would equip the new entity to better contend with major streaming players like Netflix by allowing more investment in quality programming, theatrical releases, and talent—pointing out that Netflix originally had its eyes on acquiring Warner Bros. Discovery.

Paramount accused the attorney general of safeguarding the interests of the largest streaming companies rather than consumers, contending that this lawsuit would inadvertently favor big tech firms and stall the rise of more formidable competition.

“We’re fighting against attempts to derail a merger that actually boosts competition and expands opportunities,” the spokesperson declared.

They noted that regulators in 24 areas, including several parts of the U.S. and other countries, have already approved the merger after analyzing its potential impact on competition.

This statement from Paramount came shortly after California and 11 other states filed their legal action. Notably, the merger had been previously approved during the Trump administration.

Warner Bros. Discovery deferred any comments to Paramount, which opted not to provide its own individual statements.

There are also rumors that the media giant may move its headquarters out of California, with CEO David Ellison’s advisers suggesting this shift could result in billions of dollars in investments and production being redirected from the state. Bonta responded to this news at a press conference, suggesting it looked like a strategy to pressure his office regarding the merger.

Bonta stated, “The allegations surfaced just yesterday, and it seemed like a last-minute attempt to coerce my office into permitting a merger that’s against the law.” He emphasized his commitment to enforcing the law, noting that adherence to antitrust regulations is beneficial for business.

During the press conference, he addressed the lack of scrutiny from the Trump administration regarding the merger, stating, “They completely dropped the ball; worse than that, they allowed the situation to worsen.” Bonta also extended an invitation to Republican attorneys general who have expressed concerns to join the lawsuit.

Paramount reiterated that the merger is pro-competitive, arguing that the lawsuit misinterprets established antitrust law and overlooks the current dynamics within the entertainment sector. The company believes this merger will lead to greater investment in film and television, strengthening its position against leading streaming and tech companies.

Moreover, it claims that blocking the merger would protect existing dominant players like Netflix and hinder necessary competition, asserting that it would merely uphold the flawed status quo.

They pointed out that international regulatory approvals do not necessarily reflect U.S. market concerns, and Bonta retorted that those markets function differently than the U.S. and do not address the specific issues raised in the lawsuit.

Paramount stressed that, contrary to the lawsuit’s claims, the merger has garnered support from various regulatory authorities around the world.

In its defense, Paramount highlighted Ellison’s promise to produce at least 30 films per year with 45 days of exclusive theater time and to continue licensing its content while ramping up production, which they believe would increase opportunities in the industry.

Bonta, acknowledging the complexity of the case, announced that his office hired the law firm Milbank LLP to bolster their efforts in the lawsuit.

“Their resources will help advance our case on behalf of consumers,” he concluded.