Twelve US states, including California and New York, have filed a lawsuit challenging Paramount Skydance’s acquisition of Warner Bros Discovery (WBD).
The lawsuit, which had been expected, was filed on Monday (July 13) in the US District Court of Northern California by a coalition of state lawyers led by California Attorney General Rob Bonta. The other states in the group are Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.
According to a statement from Bonta’s office, the combination of the two Hollywood studios would have the effect of “extinguishing competition between Paramount and Warner Bros, and inflicting substantial harm on movie theaters, basic cable distributors and, ultimately, audiences nationwide.”
The combined company “would control nearly one-third of theatrical motion pictures, and nearly one-third of basic cable programming,” the statement added.
Specifically, the suit claims that Warner Bros and Paramount combined would have a 27% share of the market for wide release theatrical films, leaving only three distributors controlling 75% of such films.
The coalition of attorneys general has asked Warner Bros and Paramount not to close the merger until the judicial process concludes, and says that if the companies do not agree it will file a temporary restraining order.
In the statement, Attorney General Bonta commented: “The unlawful merger of these two entertainment behemoths would lead to higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately, audiences on every sofa and movie theater seat in the US.”
Responding to the coalition’s move, Paramount claimed in a statement that the suit “distorts settled antitrust law and is based on 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,” said a Paramount spokesperson. “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.”
The spokesperson added: “The combination of Paramount and WBD will 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 for audiences, premium content, and creative talent. Put simply, any attempt to block this transaction undermines the very principles antitrust law is designed to promote: more competition, more choice for consumers, and more opportunities for creators and workers.”
The Paramount-WBD deal was approved a month ago by the US Department of Justice, which decided the merger was “not likely to harm competition or American consumers.”
The deal has also been approved by regulators in countries including Australia, Brazil, Canada and China. The deal is still awaiting clearance by the European Commission, which is expected to reveal its decision on July 22.
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