California Leads Multi-State Lawsuit to Block $110 Billion Paramount-Warner Bros. Merger

A coalition of 12 US states, led by California, has filed a lawsuit seeking to block the proposed $110 billion (£85 billion) merger between Paramount and Warner Bros., arguing that the deal would reduce competition, increase prices, and limit consumer choice.

The legal challenge targets what would become the largest media consolidation in Hollywood’s history, combining two of the industry’s most influential studios under a single company.

California Attorney General Rob Bonta, whose state is home to the headquarters and production facilities of both companies, said the merger would have far-reaching consequences for the entertainment industry and consumers.

“Audiences on every sofa and movie theater seat in the US” would ultimately be harmed by the deal, Bonta said.

If completed, the merged company would account for more than a quarter of major film releases. Combined with Disney, Universal and Sony, four entertainment giants would control approximately 86% of the major film market.

The lawsuit comes amid reports by Semafor that David Ellison, chief executive and controlling owner of Paramount Skydance, had been advised to consider relocating the company’s operations outside California. Paramount has operated in the state for more than a century.

Commenting on the report during an interview with the BBC World Service, Bonta said:

“I heard that as an explicit statement.”

He added:

“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.”

Bonta insisted the reported suggestion would not influence regulators.

“It didn’t work. It won’t work. It doesn’t work.”

The BBC said it had contacted Paramount for comment on whether the company was considering moving its operations out of California.

If approved, the merger would unite two long-standing Hollywood rivals whose combined portfolio includes major franchises such as Harry Potter, Batman, Mission: Impossible and Top Gun, as well as television brands including CNN, MTV and Nickelodeon.

Although the US Department of Justice approved the transaction in June, the coalition of state attorneys general is seeking a court order to halt the merger while the case is reviewed. The states have also warned they could seek a temporary restraining order if the companies proceed before the legal process is concluded.

According to the lawsuit, the combined company would control nearly one-third of the US theatrical film market and the country’s basic cable television sector.

Bonta argued that such market concentration would hurt both businesses and consumers.

“It 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 US.”

The lawsuit focuses on the potential impact on theatrical releases, blockbuster films and cable television channels, arguing that fewer competitors would weaken the bargaining power of cinemas and television distributors, ultimately leading to higher costs for consumers through increased ticket prices, cable fees and reduced viewing options.

According to the filing:

“Nothing justifies these substantial harms to competition.”

Supporters of the merger, however, argue that traditional media companies are under growing pressure as cable television audiences decline and streaming services continue to reshape the entertainment industry, making consolidation necessary to remain competitive.

Responding to the lawsuit, Paramount described the legal challenge as:

“fundamentally flawed”

and

“wrong,”

adding that it would:

“vigorously defend the transaction”.

The company also argued that delaying the merger would negatively affect the entertainment industry.

“Delaying this transaction 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.”

Warner Bros. had not publicly commented on the lawsuit at the time of reporting.