One of the biggest media mergers in Hollywood history is now facing its most significant legal challenge yet. A coalition of 12 state attorneys general, led by California AG Rob Bonta, filed an antitrust lawsuit Monday in federal court in Sacramento seeking to block Paramount Skydance’s $110 billion acquisition of Warner Bros. Discovery, the parent company of CNN.
The lawsuit comes despite the U.S. Department of Justice clearing the deal in June, making this a high-profile example of state officials attempting to stop a merger that has already received federal approval. California was joined by Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington, all represented by Democratic attorneys general.
“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 press conference held in front of the Hollywood sign.
What the Lawsuit Argues
The suit challenges the transaction on three specific grounds: wide-release theatrical film distribution, anticipated blockbuster film distribution and basic cable channel licensing. The states allege the combined company would control 27 percent of the wide-release theatrical market, more than 30 percent of big-budget blockbuster distribution and 27 percent of the basic cable bundle. Together with Disney, Sony and Universal, just four conglomerates would control 86 percent of the theatrical market and 90 percent of blockbuster distribution.
The states argue that losing competition between Paramount and Warner Bros. strips movie theaters and television networks of vital bargaining power, ultimately passing higher costs on to consumers through pricier tickets, higher cable bills and fewer choices. On the cable side, the lawsuit warns that a combined company controlling channels like CNN, Nickelodeon, Cartoon Network, HGTV, Food Network, TNT and TBS would force distributors to accept higher fees or risk losing programming their subscribers depend on.
“Nothing justifies these substantial harms to competition,” the lawsuit states. “Creative content that goes unproduced as a result of these disruptions is permanently lost.”
Paramount Pushes Back
Paramount called the lawsuit “fundamentally flawed” and “wrong on both the facts and the law,” vowing to fight it vigorously. The company has argued throughout the process that the merger is necessary to compete with streaming giants like Netflix, Amazon Prime and Disney+, and has pledged to release at least 30 theatrical films per year following the close.
“The combination of Paramount and WBD will create a stronger, well-capitalized, creative-first media company that is better positioned to compete with companies like Netflix,” a Paramount spokesperson said. “Delaying this transaction will only harm entertainment workers who have already suffered over recent years as technology has disrupted their livelihood.”
The company also noted that regulators in more than 20 countries and regions, including China and Australia, have already approved the deal.
The Political Dimension
The DOJ’s review has been shadowed by allegations of political favoritism. David Ellison, Paramount’s CEO, is the son of billionaire Oracle co-founder Larry Ellison, a close ally of President Trump who has donated tens of millions to pro-Trump groups. A dinner held in Washington during White House Correspondents’ week saw Trump seated alongside David Ellison and Paramount’s chief legal officer, with Acting Attorney General Todd Blanche also in attendance, while the DOJ was still reviewing the deal. Sen. Elizabeth Warren called the DOJ’s ultimate approval “reeking of corruption.”
Bonta was blunt at his press conference. “Antitrust enforcement is a check on billionaires currying favor with the president so he’ll do their bidding,” he said.
Paramount and its allies have pushed back, calling the lawsuit a Democratic campaign stunt driven by attorneys general facing reelection. The states counter that the Trump administration has largely abandoned antitrust enforcement responsibilities, pointing to a pattern of federal deference to corporate consolidation.
What Happens Next
The states have asked Paramount and Warner Bros. to voluntarily halt the transaction while the litigation proceeds. If the companies refuse, the states plan to seek a temporary restraining order, which could freeze the deal pending trial. A similar coalition of states successfully froze the Nexstar-Tegna broadcasting merger earlier this year using the same strategy.
Timing is critical. Paramount’s merger agreement includes a ticking fee of roughly $7 million per day if the deal does not close by September 30, creating enormous financial pressure to resolve the legal battle quickly. If the deal collapses entirely due to regulatory obstacles, Paramount faces a $7 billion reverse termination payment to WBD shareholders.
Internationally, the European Union has set a provisional deadline of July 22 for its review, while Britain’s Culture Secretary has signaled she may intervene in the process, adding further uncertainty to Paramount’s timeline.
Amid the pressure, reports emerged this week that advisers to David Ellison have urged him to consider moving Paramount’s operations out of California as a negotiating tactic, a prospect Bonta called “blackmail.”
“I heard that as an explicit statement,” Bonta said. “It felt like a threat, and it felt like a last-ditch effort to blackmail the regulators into allowing an illegal deal to go through. It didn’t work. It won’t work.”
Paramount declined to comment on whether a relocation was under consideration. The company has been based in California for more than 100 years.
The Writers Guild of America, SAG-AFTRA and Cinema United, the trade group representing theater owners, have all applauded the lawsuit. “This is one of the worst proposed mergers we’ve seen,” said Michele Mulroney, president of the WGA West.
The deal, if completed, would bring together legendary franchises including Harry Potter, Batman, Mission: Impossible and Top Gun, as well as streaming platforms Paramount+ and HBO Max, under a single corporate roof controlled by the Ellison family.