12 attorneys general file lawsuit to block Warner Bros.-Paramount merger

LOS ANGELES (KYMA, NBC) - California Attorney General Rob Bonta announced Monday he, along with 11 other attorneys general, filed a lawsuit to block the merger between Warner Bros. Discovery (WBD) and Paramount Skydance.

The lawsuit, according to a press release, alleges the merger "Section 7 of the Clayton Act, which holds that mergers that may substantially lessen competition or tend to create a monopoly are illegal."

"Today, I am leading a coalition of states in challenging the proposed merger of Warner Bros. and Paramount and asking the court to block the deal. 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 Attorney General Bonta. "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. 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, ideas, and perspectives beyond their own experiences. In this country, no one is above the law. 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."

Arizona Attorney General Kris Mayes released a statement saying she has also joined the coalition to sue the WBD-Paramount merger.

"If this merger goes through, Arizonans could face higher prices to see new movies and to access basic cable channels," said Attorney General Mayes. "Consolidation in industry after industry will only lead us in one direction: higher prices and degraded quality and service for Arizonans. We cannot let that happen."

The press release also says Bonta, Mayes and the other attorneys general allege if the merger is allowed, it would lessen competition in the following area:

• Wide Release Theatrical Film Distribution, where Warner Bros. and Paramount are two of the five major film distributors and would combine for around 27% share of the market. After the merger, only three distributors will control 75% of these films and only four distributors (Defendants, Disney, Universal, and Sony) will control 86% of them.
• Anticipated Top-Grossing Theatrical Film Distribution, a submarket of theatrical film distribution focused on anticipated blockbuster films with wide audiences and large production budgets. After the merger, Defendants will control more than 30% of these films, and four distributors (Defendants, Disney, Universal, and Sony) will control more than 90% of them.
• Licensing Basic Cable Television Channels, or the market for distributing basic cable channels to cable and satellite providers. Warner Bros. is the second largest and Paramount is the third largest in this market, and they would combine for a 27% share.

In response to the lawsuit, Paramount issued a statement saying the deal will create a media company that's better positioned to compete with larger companies and generate premium content.

WBD and Paramount agreed to the $110 billion merger earlier this year after Netflix, who originally agreed to buy WBD last year, announced they declined to raise its offer for WBD after the company told Netflix that Paramount's latest offer was superior.

The agreement will allow Paramount Skydance to acquire the Warner Bros. film studio, the HBO Max streaming service and several cable channels, including CNN.

Filmmakers and politicians have responded to the merger, with Sen. Adam Schiff (D-Calif.) hosting a hearing to highlight the potential impact on the merger back in March of this year.

Sen. Ruben Gallego (D-Ariz.) wrote a letter to the Department of Justice (DOJ) regarding the merger back in May of this year, saying how it will impact job losses and workforce reductions in the state of Arizona.

In addition, over 5,630 movie and television industry professionals signed an open letter expressing their opposition to the merger.

The signers include actors, writers, filmmakers, and other professionals, like Bryan Cranston, Ben Stiller, Kristen Stewart, David Fincher, Denis Villeneuve, Yorgos Lanthimos, and more.

Paramount responded to the letter, saying in part, "As creators we know firsthand that this is also a moment when the industry has been facing significant disruption—and the need for strong, creative-first and well-capitalized companies that can continue to invest in storytelling has never been greater."

Back in April of this year, WBD shareholders approved of the merger, and the DOJ cleared the deal last month.

To watch the livestream of the announcement, see attached video.