Washington Attorney General Nick Brown has joined a coalition of 12 state attorneys general in filing a lawsuit seeking to block Paramount Skydance Corporation’s proposed $110 billion acquisition of Warner Bros. Discovery, arguing the merger would reduce competition, increase prices for consumers and threaten jobs across the entertainment industry.
The lawsuit, filed in the U.S. District Court for the Northern District of California, contends the merger violates federal antitrust law by combining two of Hollywood’s five major film distributors and two of the nation’s five largest basic cable programmers into a single media giant.
If approved, the combined company would control nearly one-third of theatrical film distribution and nearly one-third of basic cable programming in the United States, according to the coalition. The attorneys general have asked Paramount and Warner Bros. not to finalize the merger while the case proceeds and said they will seek a temporary restraining order if the companies move forward before the court rules.
“As the federal government fails to hold corporations accountable for anticompetitive practices, Washington and other states are stepping up,” Brown said. “If allowed to go through, this merger would raise prices, reduce consumer choice, and cost many Americans their jobs while enriching billionaires and C-suite executives.”
The lawsuit argues the merger would substantially lessen competition in three key markets: wide-release theatrical film distribution, anticipated blockbuster films and the licensing of basic cable television channels.
According to the complaint, Warner Bros. and Paramount currently compete for theater screens, release dates and distribution agreements with thousands of movie theaters nationwide. State officials argue that competition encourages studios to produce innovative content while helping theaters negotiate better business terms.
The coalition also contends that cable and satellite providers rely on competition between the two companies when negotiating licensing agreements for television programming. Eliminating one of those competitors, the lawsuit alleges, could result in higher programming costs that are ultimately passed on to consumers through higher subscription prices.
State attorneys general estimate the combined company would control approximately 27% of the market for wide-release theatrical films and basic cable programming. In the blockbuster film market, the merged company would account for more than 30% of anticipated top-grossing releases. The lawsuit argues that, together with Disney, Universal and Sony, just four companies would control more than 90% of major theatrical releases.
The attorneys general also argue the merger could reduce the variety and quality of films and television programming while accelerating the decline of movie theaters by reducing competition among studios.
Brown co-led the lawsuit with California Attorney General Rob Bonta. Attorneys general from Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York and Oregon also joined the legal challenge.
If successful, the lawsuit could prevent one of the largest entertainment mergers in recent history from moving forward.
