States sue to block Paramount and Warner Bros Discovery merger
Twelve attorneys general say the $110 billion deal would hurt competition, raise movie prices and pressure cable TV distributors.
By Hana Yoshida · Markets Reporter
2 min read
A coalition of 12 state attorneys general sued Monday to stop Paramount’s planned $110 billion merger with Warner Bros Discovery, The Verge reported. The states argue the deal would unlawfully reduce competition and give the combined company too much power over movies and television distribution.
The lawsuit says the transaction could drive up movie prices and harm cable TV distributors, according to The Verge. The states described the merged company as a “media behemoth,” language that signals they see the deal as a major concentration of power in the entertainment business.
The challenge was brought by attorneys general from California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington, according to The Verge. Their filing asks a court to block a merger that federal antitrust enforcers chose not to challenge.
States move after federal review
The Justice Department declined last month to block the Paramount-Warner Bros Discovery deal, Politico reported, according to The Verge. That decision cleared a major federal obstacle for the companies, but it did not stop state attorneys general from bringing their own antitrust case.
The Wall Street Journal reported that the Justice Department’s decision surprised career staff members, who had been leaning toward recommending a lawsuit, according to The Verge. The states’ case now creates a separate legal threat to the merger even after the federal agency stood down.
The states’ central argument is that combining Paramount and Warner Bros Discovery would weaken competition in ways that affect both consumers and distributors. According to The Verge, the attorneys general specifically pointed to potential increases in movie prices and harm to cable TV distributors.
The lawsuit adds to scrutiny of consolidation in media, where major studios and distributors have sought scale as audiences shift across theaters, cable and streaming. The states’ complaint, as described by The Verge, focuses on the competitive effects of putting two large entertainment companies under one corporate roof.
The companies’ responses to the lawsuit were not included in The Verge’s report. The next step will be for the court to consider the states’ request to halt the transaction while the antitrust claims are litigated.
This story draws on original reporting from The Verge.