A dozen state attorneys general filed suit Monday to block Paramount Skydance's $110 billion acquisition of Warner Bros. Discovery, invoking a 1914 antitrust law to challenge a media deal the Justice Department cleared two months ago.
The California-led coalition creates an unusual federal-state split on the largest Hollywood consolidation in a generation, and puts Paramount Skydance's target close of Sept. 30 in doubt. Missing that deadline would trigger a "ticking fee" that CNBC estimated at about $650 million per quarter, paid to Warner Bros. Discovery shareholders until the transaction closes.
The complaint
The 12 states — Arizona, California, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington — filed in U.S. District Court for the Northern District of California under the Clayton Act of 1914, which bars mergers that undermine competition. The lawsuit argues the combined company would control nearly a third of basic cable programming and, by CBS News's count, more than a third of blockbuster films. Alone, Paramount and Warner Bros. Discovery would account for more than a quarter of major U.S. theatrical releases, the BBC reported; together with Disney, Universal and Sony, four companies would control 86 percent of that market.
Bonta's case
"Competition is the lifeblood of a healthy and vibrant economy," California Attorney General Rob Bonta said in announcing the suit. Bonta argued that removing one of Hollywood's largest studios would leave movie theaters and cable distributors with less bargaining leverage, costs he said would flow through to ticket prices and cable bills. The coalition asked the companies to pause the transaction pending judicial review and threatened a temporary restraining order if they refuse.
Bonta also told BBC World Service that a Semafor report suggesting Paramount was weighing a move out of California "felt like a threat last night, and it felt like a last-ditch effort to blackmail the regulators into allowing an illegal deal to go through." Paramount declined to comment on the report.
Industry backing
The Writers Guild of America and Cinema United, the largest theater exhibition trade group, endorsed the coalition, CNBC reported. More than 5,000 Hollywood professionals — including Sofia Coppola, Kevin Bacon and Robert De Niro — signed an open letter opposing the deal, CBS News reported, citing fewer creator opportunities and higher audience costs.
The counterpoint
Paramount Skydance called the lawsuit "fundamentally flawed" and vowed to "vigorously defend the transaction," arguing the combined company would be "better positioned to compete with companies like Netflix" and that blocking it "undermines the very principles antitrust law is designed to promote." The federal government reached the same conclusion in June: the Justice Department's Antitrust Division cleared the deal, writing that "the transaction is not likely to result in harm to competition or American consumers." European Union regulators are still reviewing the merger, with a provisional decision due July 22, and the U.K. review remains open.
David Ellison, Paramount Skydance's chief executive, told analysts on a recent earnings call the transaction was on track to close by September.