A dozen state attorneys general are trying to block the $110 billion merger of Paramount and Warner Bros Discovery they warn would raise movie prices and crush cable TV distributors.
The states — California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington — filed suit on Monday, arguing the combination would illegally harm competition and create a “media behemoth.” Last month, the Justice Department declined to block the merger in a decision that The Wall Street Journal reported surprised career staff who were leaning toward recommending a lawsuit. In an exit interview with Politico, former DOJ acting antitrust chief Omeed Assefi rejected the report as “not accurate.”
“[F]or every dollar generated by wide-release theatrical films and basic cable channels in this country, the combined company will pocket more than a quarter”
But according to the states’ lawsuit, the merger would result in a consolidation of two out of the five “major film distributors” and basic cable channel owners, meaning that, “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.” In a press release, Paramount said the lawsuit was “based on a misrepresentation of competition in the entertainment industry today” and that delaying it would harm consumers and entertainment talent.
The merger has raised alarms both in Hollywood and in political circles, in part because it would put CNN under the control of David Ellison, son of close President Donald Trump ally Larry Ellison. Some former CBS journalists have warned of politically charged interference in programming after Ellison tapped The Free Press founder Bari Weiss to head the network, and ratings under Weiss have reportedly dipped.
The lawsuit threatens to be costly for Paramount if it delays the deal from closing by September 30th. It’s committed to a 25 cent per share “ticking fee” to WBD shareholders for each quarter it’s delayed beyond that, about $650 million per quarter.