California-led states sue to block Paramount’s $110 billion Warner Bros Discovery deal (updated)

ATI

14/07/2026 05:12

 (Repeats item)
    * States allege deal would hurt theaters, TV distributors
    * Case could take months, costing Paramount 
    * States have asked companies to delay closing deal

    By Jody Godoy and Dawn Chmielewski
    NEW YORK/LOS ANGELES, July 13 (Reuters) - California and 11
states sued to block Paramount's  PSKY.O  $110 billion
acquisition of Warner Bros. Discovery  WBD.O , alleging the deal
would create a media behemoth with the power to raise prices in
film and television.
The lawsuitfiled in Oakland federal court, threatens to derail
Paramount CEO David Ellison's bid to transform his company into
a major rival of Netflix  NFLX.O  and Disney  DIS.N . 
States including New York, Arizona and Minnesota argued the deal
would harm theaters and television distributors, raising prices
for consumers and making wages less competitive for workers. 
    "After this merger, for every dollar generated by
wide-release theatrical films and basic cable channels in this
country, the combined company will pocket more than a quarter,"
the states said in the lawsuit, adding, "This merger, in short,
would create a media behemoth."
    Paramount said the lawsuit distorts settled antitrust law
and is based on a misrepresentation of competition in the
entertainment industry.
     
 POLITICS LOOM LARGE OVER DEAL 
    Critics of the deal have said Paramount's political
connections smoothed the path to clearance last month by the
U.S. Department of Justice. Paramount CEO David Ellison's
father, billionaire Oracle  ORCL.N  co-founder Larry Ellison,
has cultivated ties with Republican President Donald Trump. 
    Meanwhile, all of the state attorneys general involved in
the lawsuit are Democrats. Oregon Attorney General Dan Rayfield
said, “despite the federal regulators rubber-stamping this bad
deal, we’re stepping up to protect families, small businesses,
and Oregon’s film industry.”
For some Democrats, antitrust has also become a way to combat
the Trump administration when they think it is allowing
corporations to leverage their influence. Colorado, Connecticut,
Massachusetts, Nevada, New Jersey, New Mexico, and Washington
also joined the lawsuit.
"Trump is pro-rigged economy," Bonta said at a press conference
on Monday, citing major antitrust cases the DOJ has resolved,
including a case against concert company Live Nation  LYV.N .
The White House did not immediately respond to a request for
comment.
 Antitrust enforcement has also been used to combat the issues
vexing voters the most in recent years, with U.S. political
leaders leveraging competition law to harness frustration with
the soaring cost of living and to address widespread negative
sentiment towards big business.
 The Paramount deal is no different. Hollywood workers slammed
the deal, fearing it would hurt jobs. Theater owners opposed it,
worrying it would result in fewer films. 
    If allowed to move forward with the deal, Paramount would
control 27% of the distribution market for films that appear on
screens across America, 30% of blockbuster film distribution and
27% of the market for basic cable channels, the states said.
    Paramount and Warner Bros compete for the best release dates
and screens at thousands of movie theaters across the country,
the states said. Without that competition, theaters and
moviegoers could face higher prices, the states argued.
    Similarly, pay TV distributors and their subscribers rely on
competition between the two companies, which together would
control major channels such as CNN, MTV, HGTV, Cartoon Network
and Nickelodeon.
    Paramount has said the deal will allow it to produce more,
not less, after it cuts $6 billion in redundant infrastructure,
marketing and corporate jobs. Ellison has vowed that the
combined film studios would release 30 movies a year.
    The states called that commitment unenforceable, and said
that even if the company stuck to that promise, it would still
be in a position to raise prices and decrease quality after the
merger. They said the merger would ripple through the states'
economies, harming tens of thousands of writers, actors, film
crews and others.
     
DELAYS COULD COST PARAMOUNT
 Paramount shares closed up 1.5%, and Warner Bros shares rose
1.9%.
    It will likely take months for a ruling on the states'
claims, causing a delay that could rack up hundreds of millions
of dollars in costs for Paramount. The states have asked
Paramount to delay closing the deal until the legal process
concludes. Otherwise, the states said, they will seek an order
keeping the deal from closing.
“This is a major setback and arguably the most credible threat
yet to Paramount’s acquisition of Warner Bros. Discovery," said
Paolo Pescatore, analyst at PP Foresight. Delays will be costly,
even if Paramount ultimately wins, he said.
    Paramount has committed to pay around $650 million in fees
to Warner Bros. Discovery shareholders each quarter if the deal
does not close before October. The company has said delays could
force it to renegotiate the deal's financing, cause uncertainty
for its stock price, or even scuttle the transaction altogether.
Similar cases in recent years have taken an average of eight
months for a judge to reach a determination, a Reuters review of
recent federal merger cases found.

 (Reporting by Jody Godoy in New York and Dawn Chmielewski in
Los Angeles; Editing by Chris Sanders, Nia Williams, Franklin
Paul and David Gregorio)
 ((jody.godoy@tr.com))