Massachusetts Attorney General Andrea Joy Campbell has joined a coalition of 12 state attorneys general in filing a federal antitrust lawsuit challenging the proposed $110 billion acquisition of Warner Bros. Discovery Inc. by Paramount Skydance Corporation, arguing the transaction would substantially lessen competition in violation of Section 7 of the Clayton Act.
The lawsuit, filed in the U.S. District Court for the Northern District of California, seeks to prevent the merger from proceeding, contending that the consolidation would eliminate direct competition between two of the largest participants in the U.S. film distribution and basic cable television markets.
According to the complaint, the merger would combine two of Hollywood’s five major theatrical film distributors and two of the nation’s five largest basic cable programmers, significantly increasing market concentration in sectors already dominated by a handful of companies.
“Healthy competition benefits everyone – from the movie theaters and television providers that bring entertainment to our communities to the families who pay to enjoy it,” Campbell said in a statement announcing the lawsuit.
She added that the proposed transaction “threatens to reduce competition in ways that could lead to fewer choices and perspectives—as well as higher costs.”
States allege merger violates Section 7 of the Clayton Act
The coalition argues the acquisition violates Section 7 of the Clayton Act, which prohibits mergers whose effect “may be substantially to lessen competition, or to tend to create a monopoly.”
The complaint identifies three relevant markets where competition would allegedly be harmed:
- Wide-release theatrical film distribution, where the merged company would control more than 27% of the market.
- Distribution of anticipated blockbuster films, where the combined entity would exceed a 30% market share.
- Licensing of basic cable television channels, where Warner Bros. Discovery and Paramount currently rank among the largest competitors.
The attorneys general argue that the transaction would eliminate existing head-to-head competition between the companies in negotiating with movie theater chains and cable or satellite distributors.
According to the complaint, that loss of competition would likely increase the merged company’s bargaining leverage while reducing incentives to invest in the quality, quantity and diversity of film and television programming.
States prepared to seek emergency court intervention
The coalition has formally requested that the companies refrain from closing the transaction while litigation is pending.
Should the parties proceed with closing, the attorneys general said they intend to seek a temporary restraining order to preserve the status quo until the court can consider the merits of the case.
Such emergency relief is frequently sought in merger litigation where plaintiffs argue that allowing a transaction to close before judicial review could create irreversible competitive harm.
Entertainment merger faces heightened antitrust scrutiny
The challenge represents one of the most significant state-led antitrust actions against a media merger in recent years and reflects continuing scrutiny of consolidation in the entertainment industry.
According to the states, Warner Bros. and Paramount have competed independently for decades by developing films, licensing television programming and negotiating distribution agreements with thousands of movie theaters and cable providers across the United States.
The lawsuit contends that replacing that rivalry with common ownership would reduce competitive pressure that currently benefits exhibitors, distributors and consumers.
If approved, the merged company would reportedly receive more than one-quarter of all revenue generated by wide-release theatrical films and basic cable channels in the United States, further concentrating market power among a shrinking number of major media companies.
Multistate coalition
Campbell joined attorneys general from California, Arizona, Colorado, Connecticut, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington in bringing the action.
The litigation now places the proposed merger before a federal court, where judges will be asked to determine whether the transaction is likely to substantially lessen competition under federal antitrust law before it can move forward.
