California and 11 other states filed a lawsuit Monday in an effort to block the pending takeover of Warner Bros. Discovery by Paramount Skydance, claiming the merger would led to higher prices for consumers and a reduction in entertainment content.
The lawsuit, filed in federal court in Northern California, contends the $110 billion merger would put one company in charge near one-third of all theatrical motion picture and basic cable programming.
“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 U.S.,” California Attorney General Rob Bonta said in a statement. “California’s film and entertainment industry touches the lives of Americans daily — it comes into the living rooms of families, has a starring role in many young people’s first dates, and is a point of immense pride and employment for Californians up and down our state.
“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. 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.”
Other states joining the lawsuit were Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.
The U.S. Justice Department in June approved the merger, insisting in a statement at the time that “the transaction is not likely to result in harm to competition or American consumers, including with respect to: (1) streaming video on demand (“SVOD”); (2) linear television; and (3) studio development, production, or distribution of films for theatrical release.”
The estimated $110 billion transaction would combine Paramount Pictures and Warner Bros., studios whose histories span more than a century. The combined company would also include the Paramount+ and HBO Max streaming services, the CBS broadcast network and cable channels including CNN.
David Ellison, CEO of Paramount Skydance, has previously said the merger would honor the legacy of both companies while creating a next-generation media and entertainment business. Ellison is the son of Oracle co-founder Larry Ellison.
The deal has faced opposition from some entertainment industry professionals and elected officials who argue it would further consolidate ownership in the media industry.
More than 1,000 entertainment professionals signed an open letter in April opposing the merger, contending it would reduce competition at a time when the industry is already highly concentrated.