AGs sue to block Warner Bros., Paramount merger
California Attorney General Rob Bonta and a group of 12 attorneys general from across the country filed a lawsuit Monday attempting to block the Warner Bros. Discovery and Paramount Skydance merger, which shook up the Hollywood landscape when it was announced earlier this year.
The two companies first announced the deal in February, and the Justice Department's Antitrust Division signed off on the merger in June.
Bonta announced the lawsuit, which was filed against Paramount Skydance Corp. and Warner Bros. Discovery Inc. in the U.S. District Court for the Northern District of California, in a press release Monday. In it, he referred to the $110 billion deal as "unlawful."
"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 included in the release.
He continued, "California's film and entertainment industry touches the lives of Americans daily -- it comes into the living rooms of families, has a starring role in many young people's first dates, and is a point of immense pride and employment for Californians up and down our state."
Bonta claimed that this "consolidation" would lead to price hikes but also "fewer opportunities for important stories to come to life, and fewer ways for audiences to encounter stories, ideas, and perspectives beyond their own experiences.
"In this country, no one is above the law," he concluded. "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."
The lawsuit specifically alleges that the merger is unlawful because it violates Section 7 of the Clayton Act, which prohibits mergers and acquisitions that "substantially to lessen competition, or to tend to create a monopoly," according to the Justice Department.
The merger, the suit alleges, "would extinguish competition between Paramount and Warner Bros. and inflict substantial harm on movie theatres, basic cable distributors, and, ultimately, audiences nationwide."
"The merger combines two of the nation's five major film distributors, leaving only four to control over 85 percent of all wide release theatrical films in the United States," the suit states, noting that "after this merger, for every dollar generated by wide-release theatrical films and basic cable channels in this country, the combined company will pocket more than a quarter."
"This merger, in short, would create a media behemoth," it adds.
Monday's press release notes that the attorneys general have asked the two companies not to finalize their merger "until after the judicial process concludes."
"If they do not agree, the coalition will be filing a temporary restraining order," it states.
Bonta is joined in the lawsuit by the attorneys general from Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.
In a press release Monday, Paramount rejected the lawsuit's central allegation, saying it "distorts settled antitrust law and is based on a misrepresentation of competition in the entertainment industry today."
The company said joining forces with Warner Bros Discovery would allow it to invest "more aggressively in premium content, theatrical releases, and creative talent at a time when those investments matter more than ever."
A spokesperson for Paramount said in a statement included in the release that the merger would allow for stronger competition against streaming giants.
"The practical effect of this lawsuit is to shield those dominant streaming platforms like Netflix and technology companies from much needed competition while preventing the significant benefits this transaction will deliver for consumers, creators, workers, and the broader Hollywood economy," the spokesperson said.
They added, "We will continue to fight against any attempt to derail a deal that strengthens competition, expands opportunity, and positions the combined company to compete in an increasingly competitive global media landscape."
Paramount first launched a hostile takeover bid to acquire Warner Bros. Discovery back in December, just days after Netflix announced it had struck a deal to purchase a large part of the media giant.
In February, it was announced that Paramount and Warner Bros. Discovery had agreed to a deal.
The DOJ's Antitrust Division officially signed off on Paramount Skydance's acquisition proposal in June, saying in a statement at the time that it found the media megadeal was "not likely to result in harm to competition or American consumers."
ABC News has reached out to the Justice Department for comment on the lawsuit.
