A coalition of 12 state attorneys general is filing a lawsuit to block the merger of Paramount Skydance and Warner Bros. Discovery ( WBD ), arguing the deal would hurt theaters, basic cable distributors and audiences.
The coalition, led by California Attorney General Rob Bonda, argues that the acquisition violates the Clayton Act, which prohibits mergers that may substantially lessen competition or tend to create a monopoly. The attorneys general argue that if the two companies are allowed to merge, it will reduce competition in three areas: theatrical distribution of wide-release films, “high-gross” theatrical distribution and basic cable licensing.
The deal would combine two notable film studios as well as streaming platforms Paramount+ and HBO Max. It would also create one of the largest portfolios of television networks, combining Paramount’s CBS and MTV with WBD’s CNN and HBO.
The proposed acquisition has has already been checked by filmmakers, actors and industry professionals who argued that the deal would reduce competition and further consolidate the US media industry. Paramount has opposed this, saying the combined studios would release 30 films a year.
The states argue that, if approved, the deal would give Paramount significant control over key areas of the entertainment industry, including 27 percent of the U.S. movie distribution market, 30 percent of blockbuster distribution and 27 percent of the basic cable market.
“Consolidation here not only leads to higher prices — it also leads to fewer opportunities for important stories to come to life and fewer ways for audiences to encounter stories, ideas and perspectives beyond their own experiences,” Bonta said in a statement. “In this country, no one is above the law. With this lawsuit, California and our sister states are fighting for free and fair markets, not rigged markets. America has no kings in our government or our economy.”
Paramount CEO David Ellison had said in May that the transaction was on track to close by September. The deal was approved by WBD shareholders in April and cleared by the US Department of Justice, which said the transaction was not likely to harm competition or consumers.
The 11 states that join California are Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.
Paramount and WBD did not immediately respond to TechCrunch’s requests for comment.
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