California leads lawsuit to block $110B Warner Bros., Paramount merger
California Attorney General Rob Bonta has led 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, saying the deal would significantly reduce competition in the U.S. entertainment industry, Qazinform News Agency reports.
The lawsuit, filed in the U.S. District Court for the Northern District of California, argues that the merger would combine two of Hollywood's five major film distributors and two of the five largest owners of basic cable television channels.
According to the complaint, the combined company would control nearly one-third of the U.S. theatrical film distribution market and almost one-third of the basic cable programming market.
Attorney General Rob Bonta warned that the deal would reduce competition and ultimately hurt consumers, movie theaters and cable distributors.
"The unlawful merger of these two entertainment behemoths would lead to higher prices, lower quality, and less content for film and television," Bonta said.
The lawsuit alleges the proposed acquisition violates Section 7 of the Clayton Act, which prohibits mergers that may substantially lessen competition or create a monopoly.
State attorneys general argue that the transaction would reduce competition in three key markets: wide-release theatrical film distribution, anticipated top-grossing blockbuster films, and licensing of basic cable television channels.
According to the filing, the merged company would account for approximately 27% of the wide-release theatrical film distribution market. In the blockbuster segment, its market share would exceed 30%, while in the basic cable licensing market it would also hold about 27%.
The coalition has asked the companies not to complete the merger until the court proceedings conclude. If the companies refuse, the attorneys general said they will seek a temporary restraining order to prevent the deal from closing.
In addition to California, the lawsuit was joined by the attorneys general of Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.
Earlier, Qazinform News Agency reported that in February Warner Bros. Discovery rejected Paramount Skydance's takeover proposal, saying it was not reasonably likely to result in a superior transaction. The company nevertheless gave Paramount seven days to submit a binding "best and final" offer while continuing to support its previously agreed merger plan.
