12 states sue to block Paramount Skydance from buying Warner Bros.

A group of 12 states led by Democratic attorneys general on Monday sued to block Paramount Skydance’s $110 billion deal to buy Warner Bros. Discovery, the sharpest challenge to one of the biggest media and entertainment mergers in history.

The purchase would combine some of the biggest names in film, television, streaming and news, including CNN. Warner Bros. shareholders and the U.S. Justice Department have already blessed the deal, but opponents are hopeful that opposition from states or overseas could still upend it.

The lawsuit, whose plaintiffs include California Attorney General Rob Bonta and New York Attorney General Letitia James, was filed in federal district court in Northern California on Monday. The states allege that the deal violates federal antitrust law, specifically Section 7 of the Clayton Antitrust Act, which prohibits mergers that reduce competition and create monopolies.

“This merger would destroy … competition, creating a massive company with unprecedented power and influence over news and entertainment across the globe. Paramount’s acquisition of Warner Bros. threatens to raise costs for consumers and put jobs and businesses nationwide at risk,” James said in a statement.

Bonta said in a statement that the deal 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.”

Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, Oregon and Washington joined California and New York in the lawsuit.

“The lawsuit filed by the state attorneys general, in the most generous light, reflects a fundamentally flawed application of the antitrust laws and is wrong on both the facts and the law,” a Paramount spokesperson said in a statement Monday, adding that the company plans to “vigorously defend” the deal in court.

If the deal closes, it would fundamentally reshape Hollywood, combining the storied Paramount and Warner Bros. film and television studios, TV news giants CNN and CBS News, and streaming services HBO Max and Paramount+.

The states’ lawsuit isn’t the first to try to thwart the deal.
A group of consumers previously sued to block the merger, and that litigation is ongoing in federal district court in Northern California. British regulators also are considering efforts to intervene, though it’s unclear whether they can fully block the deal. (Source: The Washington Post)