States sue to block Paramount’s Warner Bros. Discovery takeover
By Brian Stelter, CNN
(CNN) — Twelve states have sued to block Paramount’s takeover of Warner Bros. Discovery, CNN’s parent, kicking off a high-stakes antitrust battle that could impede the media mega-merger.
California Attorney General Rob Bonta said the antitrust lawsuit, filed Monday in the Northern District of California, is necessary because “this merger would snuff out competition, drive up prices, diminish content quality, and produce fewer movies and shows each year.”
Paramount said it will fight the lawsuit vigorously. It called the suit “wrong on both the facts and the law,” claimed the states are misrepresenting competition in today’s entertainment industry, and said the merger “strengthens competition.”
Paramount also pointed out that regulators in markets around the world have already approved the merger, including the US Department of Justice.
The DOJ’s review was clouded by allegations of political favoritism, given Paramount’s close ties to President Trump and members of his administration. “This reeks of corruption,” Sen. Elizabeth Warren said when the DOJ approved the deal in June.
Thus, Monday’s lawsuit is a high-profile example of state-level officials trying to block a merger that has already been blessed by the federal government.
California was joined by Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington. All twelve states have Democratic attorneys general.
In conversations with CNN ahead of the filing, state-level officials said they believe the Trump administration has largely abandoned its antitrust enforcement responsibilities. So, as one of the officials said, “Someone’s gotta do it.”
A similar coalition of states sued in March to block Nexstar’s pending acquisition of Tegna, a deal that would merge two rival owners of local TV stations. The states succeeded in convincing a judge to freeze the merger in advance of a trial.
Analysts speculated that state prosecutors may have a harder time proving antitrust harm resulting from the Paramount–WBD deal, but Bonta exuded confidence at a press conference on Monday.
Standing in front of the Hollywood sign, Bonta said “antitrust enforcement is democracy’s check on oligarchy.”
Bonta also referenced Paramount CEO David Ellison by name. The executive’s father, Larry Ellison, is the billionaire Oracle co-founder whose fortune is backstopping the Paramount bid for Warner Bros.
The Ellisons have been working behind the scenes for months to secure approvals for the deal.
Paramount has said throughout the process that it is committed to completing the merger this summer. The merger agreement includes a ticking fee, which means that Paramount will have to pay more for Warner Bros. if the process is not finished by the end of September.
It is unclear how long the state-led legal process will play out. The coalition said it “has asked Warner Bros. and Paramount not to close the merger until after the judicial process concludes, and if they do not agree, the coalition will be filing a temporary restraining order.”
If a judge agreed and imposed a restraining order, Paramount would be blocked from completing the deal, though the company would almost certainly appeal. The company’s lawyers have had months to prepare for various possibilities.
On Monday, a Paramount spokesperson said, “Any attempt to block this transaction undermines the very principles antitrust law is designed to promote: more competition, more choice for consumers, and more opportunities for creators and workers.”
The antitrust concerns
Warner Bros. Discovery is the parent company of CNN, and many critics of the deal have raised concerns about the prospect of Paramount owning the cable news network and combining it with CBS News.
Bonta referenced those concerns at his press conference, alleging that “this merger will mean fewer journalists informing the electorate. It will mean fewer opportunities for Americans to hear the full breadth of information and opinions on a subject, and then come to their own conclusions.”
However, the states’ antitrust lawsuit is primarily about the merger’s potential impacts on the entertainment industry, not news.
The suit points to three specific areas of competition: “Wide release” film distribution, anticipated blockbuster film distribution, and cable channel licensing.
Combining Paramount with Warner will lessen competition in those areas, “threatening viewers with higher prices, the decline of theatrical exhibition of films, and a reduction in the variety, quality, and amount of content distributed,” the attorneys charged.
In response to the lawsuit filing, a Paramount spokesperson said the real harm to Hollywood has come from “dominant streaming and technology platforms.”
“The combination of Paramount and WBD will create a stronger, well-capitalized, creative-first media company that is better positioned to compete with companies like Netflix that have come to dominate the industry for audiences, premium content, and creative talent,” the spokesperson said.
Dueling claims about political motives
While bracing for the expected lawsuit, Paramount executives and allies have argued that the legal action is a Democratic campaign stunt, noting that some of the attorneys general are up for reelection this year.
Paramount’s critics charge that politics have been at play all along, asserting that the merger is a politically loaded move that hands control of CNN and other media assets to a Trump-aligned family.
Larry Ellison has donated tens of millions to pro-Trump groups and worked closely with the president on business matters like the US TikTok deal. David Ellison has cultivated a friendly relationship with Trump and hosted a dinner with him and top administration officials in Washington last April.
At the same time, Paramount has disputed reports about backdoor deals between Trump and the Ellisons and has said its goal with CNN would be to “deliver truth-based journalism.”
Bonta alluded to the political cloud hovering over Paramount–WBD on Monday. He said “antitrust enforcement is a check on billionaires currying favor with the president so he’ll do their bidding” and “a check on a president who’s trying to handpick winners and losers.”
A prominent global press freedom group, Reporters Without Borders, issued a statement on Monday praising the state action.
“This mega-merger would place some of the most influential news organizations in the United States under a single corporate owner, dealing a serious blow to media pluralism,” said Ben Grazda, advocacy manager for the organization’s North America arm.
“Past media mergers have repeatedly resulted in newsroom cuts, fewer journalists, and diminished access to reliable information. This merger must be stopped, and more states should join the effort to defend every American’s right to diverse, independent, and trustworthy news.”
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