A coalition of American states has launched a lawsuit to block Paramount’s $81 billion acquisition of Warner Bros. Discovery in a last-ditch effort to derail the deal.
Led by California, the suit alleges the combination of two of Hollywood’s largest production houses and distributors would heavily concentrate the entertainment and news market in the US.
The coalition has warned that if Paramount and Warner Bros close the merger prior to the legal process, they will seek a temporary restraining order to attempt to stop the deal from moving forward.
California is joined by 12 Democratic-led states, including New York, Colorado, New Mexico, New Jersey, Connecticut and Nevada.
“The unlawful merger of these two entertainment behemoths would lead to higher prices, lower quality, and less content for film and television, harming movie theatres, basic cable distributors, and ultimately, audiences on every sofa and movie theatre seat in the US,” California Attorney General Rob Bonta said.
If the $81 billion acquisition goes ahead, the new company would account for more than a quarter of major film releases. The two companies combined distributed more than 30 per cent of the top grossing Hollywood movies in the past four years, which would meet the typical threshold for merger that is considered harmful to competition.
Alongside Disney, Universal and Sony, just four conglomerates would control 86 per cent percent of that market.
The antitrust suit follows concerns raised by Hollywood unions and theatre owners, who say 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.
Paramount, which intends to defend the deal, said it will promote competition with larger companies such as Netflix and Amazon and be better for consumers.
This is a similar conclusion to the Trump controlled Department of Justice, which rapidly signed off on a deal that is closely linked to Trump ally Larry Ellison, who is the father of Paramount Skydance boss David Ellison.
