States sue to stop Paramount Skydance’s $111 billion Warner deal

A coalition of 12 states led by California sued Paramount Skydance and Warner Bros. Discovery to block their $111 billion merger, escalating antitrust scrutiny of a media deal the Justice Department approved last month. The case matters for studios, streaming platforms, cable distributors and theaters because it would combine Paramount+ with HBO Max and bring two major film and cable programming businesses under one owner.

The lawsuit was filed in the US District Court for the Northern District of California by Arizona, California, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington. California Attorney General Rob Bonta said the transaction would mean higher prices, worse quality and less film and television output for theaters, cable distributors and consumers.

The states said they asked Paramount and Warner Bros. Discovery not to complete the deal before the court process finishes. If the companies do not agree, the coalition plans to seek a temporary restraining order, according to Bonta’s office.

States challenge a deal cleared by DOJ

The Justice Department cleared the merger on June 12, saying it had concluded the deal would not hurt competition or consumers in the United States. Ars Technica reported that the decision surprised DOJ staff lawyers who had worked on the review and were leaning toward recommending litigation to stop the deal.

The transaction followed a contested process in which Netflix previously had an agreement to buy Warner Bros. Discovery’s streaming and movie studio operations, before Paramount prevailed with a hostile bid. Ars Technica reported that Paramount’s push benefited from support inside the Trump administration.

Paramount CEO David Ellison reportedly told Trump administration officials he would make major changes at CNN, which is owned by Warner Bros. Discovery and has long been criticized by President Trump. Paramount had earlier received US approval to buy Skydance after agreeing to install what FCC Chairman Brendan Carr described as a “bias monitor” at CBS.

Paramount also reached a $16 million settlement last year with Trump over his allegation that 60 Minutes deceptively edited an interview with Kamala Harris. CBS released transcripts and camera feeds that showed Trump’s claim was baseless, according to Ars Technica. Both Paramount and the FCC denied that the settlement and merger approval were linked.

Complaint targets film and cable concentration

The states allege the merger violates the Clayton Act because it may substantially reduce competition or tend to create a monopoly. Their complaint focuses on two markets: wide theatrical film distribution and licensing of basic cable channels.

According to the lawsuit, the deal would combine two of the five major US film distributors, leaving four companies in control of more than 85 percent of wide-release theatrical films. The complaint also says it would combine two of the five major owners of basic cable channels, leaving the merged company and Disney with 59 percent of basic cable.

The states argue that Paramount’s commitment to release at least 30 films a year does not remedy the alleged competitive harms. The lawsuit says that promise is not enforceable and does not address basic cable programming. It also points to Warner Bros.’ earlier commitments to make 16 theatrical films in 2023 and more than 20 in 2024, compared with actual releases of 11 films in 2023 and nine in 2024.

The cable argument is about leverage. The states say a combined company could press distributors for higher fees because losing its package could mean losing channels including CNN, Nickelodeon, Cartoon Network, HGTV, Food Network, TNT and TBS. The complaint says distributors would likely pass higher programming costs to subscribers.

Public Knowledge legal director John Bergmayer backed the states’ case, saying state attorneys general were taking action the Justice Department declined to take. He said the merger would give one company more control over production, theater availability, distributor terms and consumer prices.

Paramount told Deadline before the lawsuit was filed that it was working with remaining regulators, including state attorneys general, and was prepared to address legitimate antitrust issues. The company said it believes the deal raises no such concerns, citing reviews by competition authorities worldwide that have cleared the transaction or found no violation of applicable laws. Paramount did not disclose new concessions in that statement.

This story draws on original reporting from Ars Technica.