A coalition of 12 states led by California is suing to block Paramount's $81 billion acquisition of Warner Bros. Discovery, presenting the biggest obstacle for a deal that will combine two of Hollywood's biggest producers and distributors of entertainment and news content.
"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.," said California Attorney General Rob Bonta in a statement.
The suit was filed Monday in Northern California federal court. Bonta will hold a press conference with the iconic Hollywood sign as a backdrop later in the day to detail the coalition's filing.
Other states including New York, Colorado, New Mexico, New Jersey, Connecticut and Nevada are also part of the suit.
"This merger would destroy that competition, creating a massive company with unprecedented power and influence over news and entertainment across the globe," New York Attorney General Letitia James said.
The coalition has requested Paramount and Warner not close the merger until after this process concludes or they will file a temporary restraining order to attempt to stop the deal from moving forward.
This is the biggest threat to the deal Paramount and Warner have faced since unveiling the merger just over four months ago. The Justice Department moved fast to sign off on it, as have many international territories.
If the states succeed in at least delaying the deal, there could be significant financial implications for Paramount. As part of its agreement to acquire Warner, Paramount has said it is bound to pay Warner shareholders a 0.25 per share quarterly "ticking fee" if the deal doesn't close by Sept. 30, which would equal about $650 million per quarter.
The deal has been cleared by overseas regulatory bodies including Australia and China but is still awaiting approval from the U.K. and the European Union.
In the suit, the coalition alleges that the merger of the Warner and Paramount movie studios along with their respective cable networks is anticompetitive because it would give the combined company control of nearly one-third of theatrical films and basic cable programming.
"Consolidation here not only leads to higher prices -- it also leads to fewer opportunities for important stories to come to life, and fewer ways for audiences to encounter stories," Bonta said, adding the coalition is "fighting for free and fair markets, not rigged markets. America has no kings in government or our economy."
A Paramount spokesperson declined to comment pending a review of the suit. The company has steadfastly said this deal will promote competition with larger companies such as Netflix and Amazon and be better for consumers.
The antitrust suit comes about a month after the Justice Department allowed the deal to advance. The pairing will put the Paramount and Warner movie and television studios and Paramount+ and HBO Max streaming services under the same corporate roof. The suit, which was long expected, is yet another hurdle in a deal that Paramount Chairman and Chief Executive David Ellison has had his eye on even before he took control of that property in August of last year.
The transaction has raised concerns in Hollywood's creative community.
Major Hollywood unions and movie theater owners have raised red flags about the deal, saying it will reduce competition and lead to significant job losses. More than a thousand actors and producers sent an open letter protesting the merger in April.
"This transaction would further consolidate an already concentrated media landscape, reducing competition at a moment when our industries -- and the audiences we serve -- can least afford it," the letter said.
The coalition said the marriage of the Paramount and Warner studios would give the combined company an unfair advantage with movie theater operators and rival studios to negotiate for "the most coveted screens and calendar slots."
The combined company's cable holdings, which would be dozens of channels including CNN, MTV, Nickelodeon and Discovery, is also problematic for the coalition. Pay-TV distributors and consumers, the coalition said, need robust competition between programmers to encourage investment in content and potentially lower prices.
The coalition isn't weighing in on the combination of Paramount and Warner's respective streaming platforms, Paramount+ and HBO Max, nor the pairing of CNN with Paramount's CBS News, according to a person familiar with the matter.
In its statement signing off on the deal, the Justice Department said bringing together HBO Max and Paramount+ would likely improve the streaming video market "by offering consumers a more robust competitive alternative" to large platforms such as Netflix, Amazon and Disney. The Justice Department's senior leadership closed its investigation of Paramount's Warner deal before career staffers who were concerned about the acquisition had an opportunity to object, The Wall Street Journal reported last month.
Some industry observers worry that David Ellison, whose father Larry Ellison has close ties to the Trump administration, could enact sweeping changes at CNN. Trump has often been critical of CNN and called for new leadership.
Paramount won a bidding war against Netflix to land Warner Discovery. Paramount has said combining the production and streaming assets will make it a stronger company to compete against bigger rivals and strengthen the creative community.
This is the second time in recent months that Bonta has sought to block a major media merger. In March, California, New York, Colorado and five other states sued to stop broadcasting giant Nexstar Media Group from buying rival Tegna. In April a federal judge granted a preliminary injunction to halt the deal.
Write to Joe Flint at Joe.Flint@wsj.com
(END) Dow Jones Newswires
July 13, 2026 12:12 ET (16:12 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments