Paramount and Warner Bros sued to block $110bn mega merger
A dozen US states have filed a lawsuit against Warner Bros., claiming the biggest media consolidation in Hollywood history would stifle competition and raise consumer prices. They came together to block the $110bn (£85bn) merger between US and Paramount.
A group of states, led by California, filed a lawsuit to stop the agreement.
California Attorney General Rob Bonta claimed that the merger would harm “viewers on every couch and movie theater seat in the United States.”
If it continues like this, the new company will account for more than a quarter of major movie releases. Along with Disney, Universal and Sony, just four conglomerates can control 86 percent of this market.
The merger of Paramount and Warner Bros. will end a century-long bitter rivalry between two of Hollywood’s biggest hitmakers.
There are legendary franchises among them. Harry Potter, Batman, Mission: Impossible, And Best WeaponAs well as TV giants such as CNN, MTV and Nickelodeon.
Regulatory challenges pose a significant hurdle for entertainment giants trying to consolidate their operations.
The US Department of Justice approved the merger in June.
But the coalition of attorneys general demanded that the companies halt the transaction pending a judicial review, threatening a temporary restraining order if they did not comply.
If approved, the combined titan would control nearly a third of the U.S. motion picture market and basic cable programming.
Bonta claimed that this would “lead to higher prices, lower quality, and less content for film and television, hurting movie theaters, basic cable distributors, and ultimately audiences on every couch and movie theater seat in the United States.”
The legal challenge focuses on three main areas: major theatrical releases, major blockbusters and cable TV channels.
States argue that losing this competition would eliminate the vital bargaining power of movie theaters and television networks. Currently, if a studio charges unfair prices, a distributor can walk away and sign with its competitor.
Without that option, the lawsuit argues, movie theaters and TV networks would face higher fees, costs that would eventually be passed on to consumers through more expensive tickets, higher cable bills and fewer options.
“Nothing can justify these serious damages to competition,” the lawsuit states.
However, supporters of the agreement point out that the traditional media world is in crisis.
Cable TV audiences are rapidly declining and movie attendance faces intense and sustained pressure from tech giants and streaming platforms, making scale an economic necessity.
In a statement, Paramount called the lawsuit “fundamentally flawed” and “wrong” and added that it would “vigorously defend the transaction.”
He added: “Delaying this action will only harm entertainment workers who are already suffering as technology has disrupted their livelihoods in recent years, costing tens of thousands of entertainment jobs in California.”
The BBC has contacted Warner Bros. for comment.
