12 US State Attorneys General Sue to Block Paramount-Warner Bros. Discovery Merger
A dozen US state attorneys general have filed an antitrust lawsuit to stop the acquisition of Warner Bros. Discovery by Paramount, alleging the deal would harm competition and consumers.
Twelve US state attorneys general have filed an antitrust lawsuit in an attempt to block Paramount's acquisition of Warner Bros. Discovery (WBD). The suit was filed in the US District Court for the Northern District of California, one month after the Department of Justice approved the $110 billion merger in June.
The attorneys general from Arizona, California, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington allege that the merger would violate the Clayton Act by reducing competition in three areas: distribution of wide-release theatrical films, distribution of anticipated top-grossing theatrical films, and licensing of basic cable channels to distributors.
California Attorney General Rob Bonta stated, "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." Bonta's office noted that a combined Paramount and WBD—two of the five largest film distributors—would account for a 27% share of the wide-release theatrical distribution market and would control three-tenths of anticipated blockbuster films. In basic cable channel distribution to satellite and cable providers, the combined entity would also hold a 27% share.
Paramount has argued that consumers would benefit from the merger. CEO David Ellison stated the combined company would release at least 30 films per year and would offer stronger competition in the streaming market. As of the end of March, WBD had over 140 million global streaming subscribers, while Paramount+ had 79.6 million. For comparison, Netflix had over 325 million paid members by the end of last year.
The state attorneys general are expected to seek an injunction to block the deal from closing. Paramount and WBD still require regulatory approvals from other markets. The European Union announced this month that Paramount pledged certain concessions to earn the bloc's approval, with a provisional decision deadline set for July 22. The UK's Competition and Markets Authority launched an investigation into the deal in June.
