12 states sue to block $110B Paramount-Warner merger

A coalition of 12 states led by California sued Monday to block Paramount Skydance's $110 billion acquisition of Warner Bros. Discovery, alleging the deal would give the combined company control of more than a quarter of US film distribution and basic cable programming.

"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 US," California Attorney General Rob Bonta said in a statement.

The lawsuit, filed in federal court in Sacramento, targets three areas: wide-release theatrical film distribution, big-budget blockbuster distribution, and basic cable channel licensing. The combined company would control 27% of the US theatrical film market and 27% of basic cable programming, according to the complaint. Together with Disney, Universal and Sony, just four conglomerates would control 86% of major film releases.

The legal challenge introduces significant uncertainty for a deal that already received US Department of Justice clearance in June. Paramount faces a ticking fee of $7 million a day — roughly $650 million per quarter — if the transaction does not close by Sept. 30.

The Nexstar Precedent

A federal judge's decision to block Nexstar Media Group's $6.2 billion acquisition of Tegna in February offers a template the states may seek to follow. That ruling, which sided with state attorneys general and DirecTV, came despite DOJ approval — mirroring the current dynamic where federal clearance has not insulated Paramount from state action.

Paramount has hired noted antitrust litigator Jeffrey Kessler, who recently represented states in their challenge to Live Nation and Ticketmaster's market dominance, to defend the transaction. The company described the lawsuit as "fundamentally flawed" and said it would "vigorously defend the transaction."

The deal would end a century of rivalry between two of Hollywood's most storied studios, combining franchises including Harry Potter, Batman, Mission: Impossible and Top Gun alongside television assets such as CNN, MTV, CBS and Nickelodeon. Paramount has committed to releasing 30 films annually through the combined entity, arguing the scale is necessary to compete with tech giants and streaming platforms that have eroded traditional media economics.

Beyond the US challenge, the deal faces ongoing reviews in the European Union and the UK, which has separately signaled it may intervene. China, Canada and Australia have already granted regulatory clearances.

More than 5,000 industry professionals — including directors Sofia Coppola, actors Kevin Bacon and Robert De Niro — signed an open letter opposing the merger in April, arguing it would result in fewer opportunities for creators and higher costs for audiences. Paramount responded that the transaction would give creators "more avenues for their work, not fewer."

The coalition of states — Arizona, California, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington — has requested that the companies halt the transaction pending judicial review, threatening to seek a temporary restraining order if they do not comply voluntarily.

This article is for informational purposes only and does not constitute investment advice.