12 States File Antitrust Lawsuit to Stop Paramount’s Takeover of Warner

Attorneys general in 12 states have filed an antitrust lawsuit in a bid to stop Paramount Skydance’s $111-billion takeover of Warner Bros. Discovery.

The legal action means the deal may never go through or may be significantly altered if the attorneys general prevail in court or force Paramount to change course.

The effort is being led by California Attorney General Rob Bonta and includes also includes Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington as plaintiffs.

“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 in a statement.

“In this country, no one is above the law,” Bonta added. “With this lawsuit, California and our sister states are fighting for free and fair markets, not rigged markets. America has no kings in government or our economy.”

Speculation of the lawsuit had been brewing since last week’s reports of state attorneys general preparations to take Paramount to court over the acquisition of Warner. The lawsuit marks another instance of state attorneys general acting contrary to approvals by the federal government when dealing with the entertainment and media industries.

The U.S. Department of Justice approved Paramount’s takeover in June, seeming to pave the way for the deal to be finalized before the state attorney generals stepped in.

The justice department being at odds with state attorneys general over an antitrust issue mirrors circumstances of the Live Nation Entertainment lawsuit. In that legal action, the justice department settled a monopoly lawsuit with the parent company of Live Nation and Ticketmaster while state attorney generals continued to pursue the antitrust case, eventually prevailing at trial, a decision Live Nation Entertainment has appealed. State attorneys general also were able to hold up through legal avenues earlier this year the combining of Nexstar and Tegna television stations, which operate local news broadcasts. Federal regulators had approved the deal.

Prior to the antitrust lawsuit at hand being filed, in a statement to CNN, which is owned by Warner, Paramount said, “Antitrust authorities around the world have carefully reviewed this transaction, clearing it or concluding that it does not violate any competition laws. That regulatory record underscores what the facts, the law and the economics make clear: this transaction will create a stronger challenger to dominant global streaming and technology platforms, expand consumer choice, increase investment in premium content and theatrical distribution, and create more opportunities for creators and workers.”

The United Kingdom government is also poised to pursue antitrust action against the Paramount-Warner deal.

Paramount started pushing to buy Warner in December. David Ellison, CEO of Paramount, said then that they were a better fit than Netflix, which had been the forerunner in the purchase, to acquire Warner. In February, Paramount won the bidding war, but antitrust regulations and overcoming them meant the deal wouldn’t be finalized for months at least.