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States’ antitrust suit threatens Paramount-Warner deal timing

A dozen state attorneys general led by California sued to block Paramount Skydance’s proposed Warner Bros. Discovery takeover, arguing it would reduce competition in theaters and basic cable. Paramount says the case misreads the market and will fight it.

Published about 3 hours ago
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12 Democratic-Led States File Lawsuit to Block Paramount’s Acquisition of Warner Bros. Discovery

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Oregon, 11 other states sue to block Paramount-Warner Bros. merger

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Twelve states sue to block the $110 billion Warner Bros. and Paramount merger

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12 US states sue to block $110 billion Warner Bros.-Paramount merger

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Twelve US states have filed a lawsuit to block the $110 billion merger of Paramount and Warner Bros

States’ antitrust suit threatens Paramount-Warner deal timing
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A courtroom fight reaches Hollywood’s deal calendar

California Attorney General Rob Bonta and 11 other state attorneys general filed an antitrust lawsuit in the Northern District of California on Monday seeking to block Paramount Skydance’s proposed takeover of Warner Bros. Discovery.lakeoswegoreview +1 The coalition says the transaction, valued around $110 billion to $111 billion including debt, would unlawfully reduce competition in film distribution and basic cable programming.tribune +1 The challenge lands after the Justice Department approved the deal last month, raising the stakes for a merger the companies have been trying to close this year.broadbandbreakfast +1

The plaintiff states are Arizona, California, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.lakeoswegoreview +1 They asked the companies not to close the transaction before the case is resolved and warned they could seek a temporary restraining order if Paramount and Warner press ahead.inc +1

The states focus on theaters and cable bills

The complaint argues that combining two of the five remaining legacy Hollywood studios would give the merged company roughly 27% of the wide-release theatrical market, with three distributors controlling about 75% of those releases.lakeoswegoreview +1 The states also say the new company would control more than 30% of top-grossing theatrical films, leaving four distributors with more than 90% of that segment.inc +1

Cable is the second pillar of the case. Warner Bros. Discovery and Paramount are described as the second- and third-largest owners of basic cable channels, a combination the states say would create a 27% share in that market and give the merged company more leverage over distributors.lakeoswegoreview +1 Bonta said the deal would lead to “higher prices, lower quality, and less content,” while Paramount called the lawsuit flawed and said it would “vigorously defend” the transaction.unn +1

Delay could become expensive

The lawsuit could disrupt Paramount’s closing timetable even without an immediate final ruling. Axios reported that the companies face the prospect of delay costs, while NPR said securities filings call for roughly $650 million in additional consideration for every 90 days after Oct. 1 if the deal has not closed.inc +1

Paramount says the merger would create a stronger competitor against Netflix, Amazon, Apple and other technology-backed entertainment platforms, and that delay would harm entertainment workers already squeezed by industry disruption.yahoo +1 Critics, including the Writers Guild of America and theater trade group Cinema United, argue further consolidation would mean fewer jobs, fewer releases and higher prices for audiences.inc +1 A federal judge will now decide whether the states’ forward-looking Clayton Act claims are strong enough to stop Hollywood’s largest proposed combination.unn +1