12 States Sue to Block Paramount-Skydance, Warner Bros. Merger

A group of twelve state attorneys general filed a federal antitrust suit on Monday to block the proposed $111 billion merger between Paramount Skydance and Warner Bros., directly opposing the Department of Justice’s June approval. The complaint alleges that the deal violates the Clayton Act by reducing competition in wide-release theatrical distribution, the market for top-grossing films, and basic-cable licensing.

"The unlawful merger of these two entertainment behemoths 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.," California Attorney General Rob Bonta said.

The states contend the combined entity would control roughly 27% of the wide-release market, 30% of the blockbuster sub-market, and 27% of basic-cable bundles, potentially harming theaters and cable providers that rely on distributor competition. They note that the five legacy studios—including Disney, Sony and Universal—already dominate 86% of theatrical distribution and 90% of blockbuster distribution.

Paramount argues the merger will create a stronger streaming competitor to Netflix, Amazon and Disney, with CEO David Ellison pledging at least 30 film releases annually. Paramount’s legal counsel, Jeffrey Kessler, called the lawsuit “nonsensical,” saying it would increase production and jobs.

The Justice Department’s lengthy commentary concluded the transaction would not lessen competition in theatrical, streaming or linear TV markets. Hollywood unions have expressed concerns that further consolidation could affect jobs.

The states are seeking an injunction to halt the deal, which Paramount expects to close after July 22. Oregon Attorney General Dan Rayfield had earlier asked for a 60-day pause, citing incomplete document responses from Paramount, but withdrew the request.

All twelve states—Arizona, California, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington—are represented by Democratic attorneys general and have recently pursued independent antitrust actions, such as the injunction against the Nexstar-Tegna merger.