A coalition of 12 states led by California filed a lawsuit Monday to block Paramount’s $81 billion acquisition of Warner Bros. Discovery, creating the most serious regulatory hurdle yet for the massive merger that would combine two of Hollywood’s largest producers and distributors of entertainment and news content.
California Attorney General Rob Bonta said the deal would produce “higher prices, lower quality, and less content for film and television,” harming movie theaters, cable distributors, and consumers across the country.The suit was filed in federal court in Northern California. Other participating states include New York, Colorado, New Mexico, New Jersey, Connecticut, and Nevada.
The states criticize the Trump administration for its lax approach to antitrust enforcement, with Bonta stating officials “are not just missing in action, they are making things worse,” citing the Ticketmaster and Nexstar-Tegna deals.
The coalition is asking the court to prevent the companies from closing the merger until the case concludes and has signaled it will seek a temporary restraining order if needed.
This legal challenge is the biggest threat the deal has faced since it was announced more than four months ago. The Justice Department quickly approved it, along with regulators in many countries including Australia and China, though approvals from the U.K. and European Union remain pending.
If the states delay closing past Sept. 30, Paramount faces significant costs: a quarterly “ticking fee” of about $650 million payable to Warner shareholders.
The states allege the merger would give the combined company control of nearly one-third of U.S. theatrical films and basic cable programming, substantially reducing competition.