A coalition of 12 state attorneys general is filing a lawsuit to block the merger of Paramount Skydance and Warner Bros. Discovery (WBD), alleging that the deal would harm movie theaters, basic cable distributors, and audiences.
The coalition, led by California Attorney General Rob Bonta, argues that the acquisition violates the Clayton Act, which prohibits mergers that may substantially lessen competition or tend to create a monopoly. The attorneys general allege that if the two companies are allowed to merge, it would lessen competition in three areas: wide release theatrical film distribution, “top-grossing” theatrical distribution, and basic cable licensing.
The deal would combine two notable film studios as well as streaming platforms Paramount+ and HBO Max. It would also create one of the largest portfolios of television networks, bringing together Paramount’s CBS and MTV with WBD’s CNN and HBO.
The proposed acquisition has already received scrutiny from filmmakers, actors and industry professionals who have argued that the deal would reduce competition and further consolidate the U.S. media industry. Paramount has argued against this, saying the combined film studios would release 30 movies a year.
The states argue that, if approved, the deal would give Paramount significant control over key areas of the entertainment industry, including 27% of the U.S. film distribution market, 30% of blockbuster movie distribution, and 27% of the basic cable channel market.
“Consolidation here not only leads to higher prices — it also leads to fewer opportunities for important stories to come to life, and fewer ways for audiences to encounter stories, ideas, and perspectives beyond their own experiences,” Bonta said in a statement. “In this country, no one is above the law. With this lawsuit, California and our sister states are fighting for free and fair markets, not rigged markets. America has no kings in government or our economy.”
Paramount CEO David Ellison had said in May that the transaction was on track to close the deal by September. The deal received approval from WBD shareholders in April, and has been cleared by the U.S. Department of Justice, which said the transaction is not likely to result in harm to competition or consumers.
The 11 states joining California are Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.
Paramount and WBD did not immediately respond to TechCrunch’s requests for comment.
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