States Seek to Block Paramount-Warner Bros. Discovery Deal Over Cable Market Concerns
Twelve state attorneys general have filed an antitrust lawsuit challenging the $110 billion Paramount-Warner Bros. Discovery merger, arguing that the combined company would dominate a declining cable-channel licensing market.
A coalition of twelve state attorneys general has sued to stop Paramount Global’s proposed $110 billion acquisition of Warner Bros. Discovery, citing the potential for excessive concentration in the cable-channel licensing market. The complaint identifies cable as one of three sectors where the merger could create a monopoly, alongside film distribution and other areas.
U.S. District Judge Araceli Martínez-Olguín in California granted a temporary restraining order that halts the transaction and noted that the cable-bundle aspect of the deal requires further scrutiny. She wrote that Paramount’s claim that the merger would not increase its bargaining power with pay-TV operators “fails because it rests on false assumptions regarding activity in the market for licensing basic cable channels to distributors.”
Paramount’s chief legal officer, Makan Delrahim, who previously led the Justice Department’s antitrust division, responded that the merging parties’ channel line-ups are “complements, not substitutes,” and that the declining cable market diminishes any increase in bargaining power. The defense relies on the “failing market” argument, which has been used in past cases to justify mergers in shrinking industries.
Legal scholars and industry analysts expressed skepticism. Former DOJ antitrust attorney Sam Weinstein said firms often invoke the failing-market rationale to defend mergers that would otherwise raise concentration concerns. Financial commentator Rich Greenfield noted that historically, horizontal cable-network mergers have been pursued to strengthen leverage with distributors, contradicting Paramount’s complement claim.
Media analyst Michael Morris cited precedent from a 1974 Supreme Court case involving coal producers, suggesting that structural market-share evidence can be rebutted when the underlying market is in decline. He calculated that the combined company would control roughly 28.5% of affiliate-fee revenue, higher than the 27% figure cited by the states.
The lawsuit also faces parallel litigation from the Writers Guild of America, which argues the merger could harm workers. A trial date has not yet been set, and the parties remain in pre-trial proceedings.