A coalition of twelve state attorneys general, led by California Attorney General Rob Bonta, filed suit in U.S. District Court for the Northern District of California on Monday to block the proposed merger between Paramount and Warner Bros. Discovery. The legal challenge was brought by attorneys general representing Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington. The lawsuit alleges that combining the two major entertainment conglomerates raises serious antitrust concerns.
The proposed transaction would unite two historic film studios along with their streaming platforms, Paramount+ and HBO Max, which would be consolidated into a single service. The merger would also create the largest television network portfolio in the United States by combining Paramount’s CBS broadcast network and channels including MTV and BET with Warner Bros. Discovery’s CNN, TNT, and other properties. According to the filing, the combined entity would control approximately one-third of theatrical films and nearly one-third of basic cable television programming in the country.
State attorneys general contend the merger would result in higher consumer prices, reduced content quality, and fewer entertainment productions. They have requested that both companies refrain from closing the transaction pending the conclusion of legal proceedings and threatened to seek a temporary restraining order if necessary. Paramount rejected these characterizations, arguing the merger would create a stronger competitor capable of competing with dominant streaming services like Netflix and would maintain robust film production levels.
The merger previously received shareholder approval from Warner Bros. Discovery in April, and company leadership had targeted a closing date of September. However, the deal carries financial consequences if delayed; Paramount agreed to pay a quarterly ticking fee of 25 cents per share to Warner Bros. Discovery shareholders if closing extends beyond September 30. This obligation could amount to approximately 650 million dollars per quarter. The Department of Justice approved the transaction in mid-June, but the European Union continues its review with a provisional deadline of July 22.
Originally reported by CNBC. Read the full story →