12 States Sue to Block Paramount’s Warner Bros. Takeover
A coalition of 12 Democratic state attorneys general filed an antitrust lawsuit on Monday seeking to block Paramount Skydance Corporation’s $110.9 billion acquisition of Warner Bros. Discovery, arguing that the megamerger would “extinguish competition” in Hollywood and harm consumers nationwide. The lawsuit, filed in the U.S. District Court for the Northern District of California, represents the most significant regulatory hurdle yet for what would be the largest all-cash transaction in corporate history.
The Lawsuit
Led by California Attorney General Rob Bonta, the coalition includes the attorneys general of Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington. The lawsuit alleges that combining two of Hollywood’s five remaining major film studios would violate Section 7 of the Clayton Act, which prohibits mergers that may substantially lessen competition.
“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 U.S.,” Bonta said at a news conference in Los Angeles.
New York Attorney General Letitia James warned that the combined entity would wield “unprecedented power and influence over news and entertainment across the globe,” while also putting jobs and businesses nationwide at risk.
Market Concentration Concerns
According to the lawsuit, a combined Paramount-WBD would control approximately 27% of theatrical film distribution revenue and 27% of basic cable programming revenue. For big-budget tentpole releases — which account for 88% of box office revenue over the last three years — the merged company would control more than 30% of the market. Just four studios — Paramount-WBD, Disney, Universal, and Sony — would control 86% of wide-release films.
The complaint draws a direct parallel to Disney’s 2019 acquisition of 21st Century Fox, noting that Fox released less than half as many films in the four years after that merger compared to the four years before. The states argue that Paramount’s promise to release 30 theatrical films per year is “not legally enforceable” and would still permit the company to harm competition by reducing investment and raising prices.
Paramount’s Defense
Paramount pushed back forcefully against the lawsuit, calling it a “fundamentally flawed application of the antitrust laws.” A company spokesperson argued that the merger would create a “stronger, well-capitalized, creative-first media company” better positioned to compete with streaming giants like Netflix, Amazon Prime Video, and Disney+.
“Delaying this transaction will only harm entertainment workers who have already suffered over recent years as technology has disrupted their livelihood and cost California tens of thousands of entertainment jobs,” the spokesperson said.
The company has hired high-profile legal talent, including antitrust litigator Jeffrey Kessler — who recently won the Ticketmaster monopolization case for states — and former U.S. Solicitor General Paul Clement. Paramount has signaled it may challenge the Philadelphia National Bank precedent, a landmark 1963 Supreme Court ruling that set a 30% market share threshold as presumptively anticompetitive.
Political Dimensions
The lawsuit carries a clear partisan dimension: all 12 signatories are Democrats, and no Republican attorneys general joined the challenge. The states’ action comes despite the U.S. Department of Justice Antitrust Division approving the deal on June 12 under the Trump administration, with the DOJ stating the merger would “increase competition across the media and entertainment ecosystem.”
Arizona Attorney General Kris Mayes raised concerns about the relationship between Paramount CEO David Ellison — son of Oracle co-founder Larry Ellison — and President Trump. “Something happened and perhaps that something had to do with a mega-billionaire named Ellison,” Mayes told reporters. “We are seeing more and more instances where the Trump DOJ is just rolling over for corporate consolidation.”
Bonta accused the administration of “greenlighting deals that their own antitrust section knows and believes are unlawful,” while Paramount has reportedly threatened to leave California if the state pursued the lawsuit.
Industry Reaction
The Writers Guild of America welcomed the lawsuit, warning that consolidation would lead to “fewer jobs, lower wages for entertainment workers, less variety of programming, and higher prices for consumers.” Michael O’Leary, president and CEO of Cinema United, which represents theater owners, said the ramifications of further studio consolidation would be “significant and lasting” for local movie theaters that serve as “cultural and financial cornerstones for communities of all sizes.”
What’s Next
The states have asked Paramount and Warner Bros. to delay closing the merger until the judicial process concludes. If the companies refuse, the coalition plans to seek a temporary restraining order. The clock is ticking for Paramount: a “ticking fee” of $0.25 per share per quarter — approximately $7.2 million per day — kicks in if the deal does not close by September 30. The regulatory termination fee stands at $7 billion.
Beyond the U.S., the merger has received clearance from China, Canada, and Australia, but remains under review in the European Union (with a provisional deadline of July 22) and the United Kingdom. Even without a temporary restraining order, litigation could take years, giving the states significant leverage through the ticking fee structure.
The outcome of this case could fundamentally reshape the entertainment industry — and U.S. antitrust law — for decades to come.