California and 11 other states filed an emergency motion on Monday evening asking a federal judge to block the proposed $110 billion merger between Warner Bros and Paramount, the largest media consolidation in Hollywood history.
The coalition, led by California Attorney General Rob Bonta, requested a temporary restraining order and preliminary injunction to prevent the deal from closing while the states pursue an antitrust lawsuit. The states asked the judge to act by July 22. Paramount has told the states it will not close the transaction before that date. Variety reported the transaction value as $111 billion.
A century of rivalry at stake
The merger would combine two of Hollywood’s biggest hitmakers, ending a century of fierce rivalry. Between them, the companies own franchises including Harry Potter, Batman, Mission: Impossible, and Top Gun, as well as television channels CNN, MTV, and Nickelodeon. If the deal goes ahead, the combined company would account for over a quarter of major film releases. Together with Disney, Universal, and Sony, four conglomerates would control 86% of that market. The states argue the combined titan would control nearly a third of the US theatrical motion picture market and basic cable programming.
Bonta was blunt. “These titans of industry must not move to merge until a court properly evaluates our claims,” he said in a statement Monday evening. “I will not let Warner Bros. and Paramount merge without a fight.” He told BBC World Service the merger would harm “audiences on every sofa and movie theater seat in the US.”
Three markets in the crosshairs
The lawsuit targets three markets: wide-release theatrical distribution, blockbuster film distribution, and basic cable TV distribution. The states argue that losing competition between Paramount and Warner Bros strips movie theaters and television networks of bargaining power. At present, if one studio demands unfair prices, a distributor can walk away and deal with the rival. Without that option, theaters and networks face higher fees. Those costs would hit consumers through pricier tickets, higher cable bills, and fewer choices.
The motion states the deal would “eliminate competition between Paramount and Warner Bros. and enable the combined entity to raise prices and reduce output.” The states argue that if the deal closes and is later ruled unlawful, it will be impossible to “unscramble the egg.” To win the injunction, the states must persuade a judge that their case has a likelihood of success and that they will suffer irreparable harm without the injunction.
The US Department of Justice approved the merger in June. But the state coalition pressed ahead. The injunction ruling will be an early test of the states’ case. In March, a similar coalition obtained an order blocking the Nexstar-Tegna merger. That ruling is now on appeal.
Ellison relocation report draws Bonta’s ire
Semafor reported that David Ellison, controlling owner and chief executive of Paramount Skydance and son of tech billionaire Larry Ellison, has been urged by advisers to move the company’s operations out of California. Paramount has been based in the state for more than 100 years. Bonta said he was aware of the report.
“I heard that as an explicit statement. I’ll even say it felt like a threat last night, and it felt like a last-ditch effort to blackmail the regulators into allowing an illegal deal to go through,” he said. “It didn’t work. It won’t work. It doesn’t work.” Paramount declined to comment on whether it was considering shifting operations out of the state.
Paramount fired back. The company called the lawsuit “fundamentally flawed” and “wrong,” adding it would “vigorously defend the transaction.” In a statement, Paramount said delaying the deal “will only harm entertainment workers who have already suffered over recent years as technology has disrupted their livelihood and cost California tens of thousands of entertainment jobs.” Supporters of the deal argue that the traditional media world is in crisis, with cable audiences shrinking and cinema attendance under pressure from tech giants and streaming platforms, making scale an economic necessity.
The lawsuit states: “Nothing justifies these substantial harms to competition.” Warner Bros has been contacted for comment, according to BBC.