NEW YORK (AP) 鈥� Twelve states sued to block Paramount鈥檚 on Monday, arguing that the $81 billion merger would 鈥渆xtinguish competition鈥� in Hollywood and lead to fewer choices for consumers across the U.S.
鈥淎udiences on every sofa and in every movie (theater) seat would feel the impact of this unlawful merger,鈥� California Attorney General Rob Bonta, who is leading the case, said in a news conference from Los Angeles. He said the deal would result in higher prices, fewer movies and TV shows and lower quality of content overall.
A Paramount-Warner combo would bring together legacy studios. It putting Warner’s HBO Max, libraries filled with fan favorites like 鈥淗arry Potter鈥� and under the same roof of Paramount-owned CBS and the Paramount+ streaming service.
In Monday’s complaint, the states said such a tie-up would also 鈥渋nflict substantial harm鈥� on movie theatres and basic cable distributors. Bonta’s office said the states are asking Warner and Paramount to not close this merger 鈥渦ntil after the judicial process concludes.” And if the companies do not agree, the coalition would then file a temporary restraining order.
Paramount said Monday’s lawsuit 鈥渄istorts settled antitrust law” and maintained that its merger would instead create a “stronger competitor against dominant streaming and technology platforms who have harmed the market for theatrical exhibition and jobs in the entertainment industry.鈥�
The company, which was bought just last year, vowed to 鈥渧igorously defend鈥� the transaction.
Warner deferred to Paramount for comment. Beyond California, states joining Monday’s lawsuit include Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.
Where Paramount’s takeover of Warner stands
Monday’s antitrust case arrives at a pivotal time for the Paramount-Warner transaction 鈥� which, after months of what became a very public bidding war , received in April and then a just last month.
The companies have hoped to close their deal sometime in the third quarter of this year, recently signaling an effort to complete the process in the coming weeks. The states鈥� lawsuit could throw a wrench in those plans, at least for now.
The clock is ticking. Paramount also pledged to give shareholders some compensation if that process isn鈥檛 complete by Sept. 30 鈥� in the form of a 25-cent per share 鈥渢icking fee鈥� for every quarter past that date. And it鈥檚 agreed to a regulatory termination fee of $7 billion.
Beyond the U.S., Paramount has touted additional regulatory clearances it says it鈥檚 received in a handful of other countries, including China, Canada and Australia. Meanwhile, other reviews remain in progress, including in the European Union and the U.K. 鈥� which has separately suggested it may intervene.
Including debt, Paramount鈥檚 proposed purchase of Warner is valued at nearly $111 billion (or $31 per share) based on current outstanding shares.
Critics decry merger
Warner and Paramount argue that merging will be good for growth in the industry and give consumers access to more content, especially if HBO Max and Paramount+ libraries are combined. But critics have decried what further consolidation could mean in an industry by just a few major players.
Monday’s lawsuit from the states pointed to movies that make their way into theaters and the wider TV landscape 鈥� noting that a combined Paramount-Warner could control nearly a third of both the theatrical film distribution market as well as basic cable programming.
Such a combination would create 鈥渁 massive company with unprecedented power and influence over news and entertainment across the globe,鈥� said New York Attorney General Letitia James, who is among those challenging the deal. Beyond consumer impacts, she also said the merger would 鈥減ut jobs and businesses nationwide at risk.鈥�
Thousands of actors, directors, writers and other industry professionals have already voiced to the deal. Monday’s challenge garnered applause from groups like the Writers Guild of America, who warn that consolidation would result in “fewer jobs, lower wages for entertainment workers, less variety of programming, and higher prices for consumers鈥�
Paramount argued on Monday that delaying the merger 鈥渨ill only harm entertainment workers who have already suffered over recent years as technology has disrupted their livelihood.”
The company added that the states’ case would 鈥渟hield鈥� larger streaming rivals like Netflix from meaningful competition.
Political questions
Throughout Paramount’s quest for Warner, questions of political influence have also piled up 鈥� with criticism falling largely along party lines in Washington. No Republicans signed on to the states鈥� case on Monday.
Democrats have long expressed skepticism about whether regulators working under Trump would scrutinize the deal as heavily. Several attorneys general joining Monday’s lawsuit took aim at the Justice Department’s 鈥� pointing in particular to the president’s close relationship with the billionaire family of Paramount CEO David Ellison.
鈥淪omething happened and perhaps that something had to do with a mega-billionaire named Ellison,” Arizona Attorney General Kris Mayes told reporters on Monday. 鈥淲e are seeing more and more instances where the Trump DOJ is just rolling over for corporate consolidation,” she added.
Last month, DOJ leadership released a lengthy statement in support of the deal 鈥� maintaining a Paramount-Warner combo would 鈥渋ncrease competition across the media and entertainment ecosystem, with benefits for American consumers and workers.鈥� The Justice Department had maintained that politics would not play a role in its review.
Trump himself previously Warner鈥檚 future, despite backpedaling on what he once suggested his personal role would be in approving a merger.
Many eyes are on CNN, a network that has long attracted ire from Trump and his allies.
Paramount鈥檚 CBS has already seen and shifts in editorial leadership since coming under Skydance ownership last year 鈥� and if Warner merger goes through, the reach of that could grow. Several Trump administration officials have also been far from shy from sharing their hopes for CNN under Paramount ownership, with Defense Secretary Pete Hegseth telling reporters in March that 鈥渢he sooner David Ellison takes over that network, the better.鈥�
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Mikella Schuettler contributed from Phoenix.
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