The $111 billion merger between Paramount Skydance and Warner Bros. Discovery is facing another serious obstacle before completion. A coalition of state attorneys general, led by California’s Rob Bonta, is preparing to file an antitrust lawsuit as soon as Monday to block the deal, according to multiple people familiar with the plans, as first reported by Reuters and subsequently confirmed by The New York Times, CNBC and Deadline.
New York Attorney General Letitia James, Connecticut Attorney General William Tong and Washington state’s Nick Brown are also expected to join the action, which will seek a temporary injunction to halt the merger, according to sources on both coasts who spoke to Deadline. The lawsuit argues that a combined Paramount and Warner Bros. would harm competition in the market for tent pole films, the expensive blockbusters that make up a large portion of studio revenues, and would give the merged company outsized power over streaming through Paramount+ and HBO Max.
“It’s classic market domination for movies and streaming services, stifling competition,” one person with direct knowledge of the draft document told Deadline. “A joint Warner Bros. and Paramount could squeeze out other players and offer audiences reduced choice.”
The legal challenge arrives at a pivotal moment. The U.S. Department of Justice cleared the deal in June, stating the transaction was “not likely to result in harm to competition or American consumers,” and the merger has already received approval from more than 20 countries and regions including China, Australia, France, Canada, Brazil, Saudi Arabia and Germany, according to Paramount. The European Union has set a provisional new deadline of July 22 for its review, and Britain’s Culture Secretary has said she is “minded to intervene.” WBD shareholders approved the deal in April, and Paramount CEO David Ellison said on a recent earnings call that the transaction is on track to close by September, as reported by CNBC.
Paramount has pushed back firmly. “We are confident this transaction raises no such concerns, as demonstrated by the dozens of antitrust authorities around the world that have carefully reviewed the transaction and either cleared it or concluded that it does not violate applicable competition laws,” a Paramount Skydance spokesperson told Deadline.
The deal, if completed, would create one of the most powerful media conglomerates in history. It would unite two major movie studios, combine streaming platforms Paramount+ and HBO Max into one service, and bring together the largest portfolio of TV networks in the U.S., including CBS, CNN, TNT, MTV and BET. The Ellison family, backed by investments from Saudi Arabia’s Public Investment Fund, Abu Dhabi’s L’imad Holding, Qatar’s QIA TMT Holding and LionTree Investment Fund, would control the combined entity, with those investors holding non-voting shares, according to Paramount filings.
The deal has drawn scrutiny over the relationship between David Ellison and President Trump. In April, CBS News hosted a dinner attended by Trump, Ellison, Paramount’s chief legal officer Makan Delrahim and Acting Attorney General Todd Blanche, billed as honoring the Trump White House, while the Justice Department was still reviewing the deal, as reported by The New York Times. Some DOJ officials reportedly sought further investigation of the merger before being overruled, according to Deadline.
Hollywood has been watching closely. More than 1,000 writers, actors and directors signed a letter in April opposing the deal, warning it would curtail spending on film and TV projects. Ellison has countered that the combined company would release at least 30 movies in theaters annually, maintain a 45-day theatrical window before streaming and achieve $6 billion in cost savings within three years, according to sworn declarations filed by Paramount executives in related court proceedings.
In an attempt to head off the lawsuit, Paramount has privately offered California a series of concessions, including a proposed $50 million fund to train union workers displaced by new technologies such as artificial intelligence, according to two people familiar with the company’s position who spoke to The New York Times. California’s Bonta has publicly stated he prefers “structural remedies,” typically meaning the sale or spinoff of a portion of the business.
Adding pressure to the timeline, Paramount faces a ticking financial clock. Beginning in October, the company is on the hook for nearly $650 million per quarter for every quarter the deal remains unclosed, amounting to roughly $7 million per day. If the deal collapses entirely due to regulatory obstacles, Paramount must pay a $7 billion reverse termination fee to WBD shareholders, according to Deadline.
The financial strain is already showing on Wall Street. Paramount shares have lost roughly 30 percent of their value in 2026, closing at $9.41 on July 10. WBD stock, which more than doubled in late 2025 as Netflix, Paramount and Comcast competed to acquire the company, has since drifted down approximately 8 percent to $26.59, according to Deadline.
Paramount has also been exploring leverage of its own. According to Semafor, advisers to David Ellison have urged the company to consider relocating its headquarters out of California and redirecting planned investments as a negotiating tactic, though no final decision has been made and the company has previously committed to maintaining both studios’ California facilities.
The state antitrust action fits into a broader pattern of Democratic attorneys general taking a more aggressive posture on competition during the second Trump administration. State AGs previously secured a restraining order to pause the Nexstar-Tegna broadcasting merger and won a jury verdict finding Live Nation had operated as a monopoly, after the Justice Department settled those same concerns, according to The New York Times.
Paramount has bulked up its legal team in anticipation of the fight, hiring Jeffrey Kessler of Winston Taylor, the attorney who won the Live Nation verdict for the states, as well as Supreme Court veteran Paul Clement of Clement and Murphy, according to two people familiar with the company’s position.