Paramount, WBD hit with lawsuit from 12 states to block merger
A group of 12 state attorneys general filed a lawsuit Monday is tough Paramount Skydance recommended purchase Warner Bros. Discovery.
The lawsuit, which comes after weeks of speculation about whether and when it will be opened, aims to block the merger due to competition concerns. CNBC’s David Faber reported earlier in the day that the lawsuit was expected to be filed on Monday.
The merger deal will combine two storied film studios (Paramount and Warner Bros.) as well as streaming platforms Paramount+ and HBO Max. extraordinary CEO David Ellison had previously said that the streaming services would become a single service following the transaction.
It would also mean combining Paramount’s broadcast network CBS and pay TV channels like MTV and BET with WBD’s CNN, TNT and others, creating the largest portfolio of TV networks in the US.
Led by California Attorney General Rob Bonta, caseThe lawsuit, filed in the U.S. District for the Northern District of California, was also brought by the attorneys general of Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.
“The illegal merger of these two entertainment giants will lead to higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately audiences on every couch and movie theater seat in the United States,” Bonta said in a statement. he said.
In a lengthy statement released Monday, a Paramount spokesman called the lawsuit a “misrepresentation of competition in the entertainment industry today,” adding that the lawsuit plans to “vigorously defend the transaction and demonstrate that this challenge is inconsistent with sound antitrust policy and the competitive realities of the media marketplace.”
“Delaying this transaction will only harm entertainment workers who have already suffered in recent years as technology disrupted their livelihoods and cost tens of thousands of entertainment jobs in California,” Paramount’s statement continued.
On Monday, Bonta held a news conference in front of the Hollywood sign in Los Angeles, reiterating the points made in the lawsuit.
“This merger will eliminate competition, increase prices, reduce content quality, and fewer movies and TV series will be produced each year,” Bonta said at the press conference. “We have antitrust laws and merger controls for a reason—because competition is the lifeblood of a healthy, vibrant economy.”
The lawsuit, filed Monday, raises concerns about the combined company’s size, adding that the merged entity would control about a third of movies and nearly a third of basic cable TV programming. Attorney General, Warner Bros. and asked Paramount not to close the merger until the judicial process was completed, threatening to issue a temporary restraining order if they did not comply.
Paramount disagreed in a statement on Monday, saying the merger would “create a stronger, well-capitalized, creativity-first media company that is better positioned to compete with companies like Netflix that dominate the industry for viewers, premium content and creative talent.” “Simply put, any attempt to block this transaction undermines the principles that antitrust law is designed to promote: more competition, more choice for consumers, and more opportunity for creators and workers.”
The merger received approval from WBD shareholders in April, and Ellison said in a recent earnings call that the merger was on track to be completed by September.
Hollywood has previously expressed concerns about the merger, citing the possibility of fewer films being released and the potential for job losses in the industry. Ellison promised that when the movie studios merged, they would produce a slate of 30 films a year and said he was committed to preserving jobs.
Ellison first set his sights on WBD last September. Just weeks after Paramount and Ellison’s Skydance completed their merger, the company made its first bid for WBD, resulting in multiple offers and a formal sales process.
WBD eventually signed a deal to sell its movie studio and broadcast assets. netflix. However, Paramount launched a hostile takeover bid and then changed its bid. Netflix backed out of the deal and Paramount walked away with an agreement to buy all of WBD for $31 per share.
The deal has come under scrutiny from lawmakers in both the U.S. and Europe, including over foreign financing that was part of Paramount’s bid. In mid-June, the U.S. Department of Justice’s Antitrust Division signed off on the merger, clearing it of federal concerns.
“The Division has completed its analysis of the proposed merger of Paramount and Warner Bros. and has determined, based on the evidence obtained in its investigation, that the transaction is unlikely to harm competition or American consumers.” department said in his determination.
The merger has also received approval from many global jurisdictions as it moves towards a potential closing.
However, the European Union is still reviewing the agreement for approval under a new interim document. deadline It was set for July 22. The European Commission said in a public filing this month that Paramount offered concessions to address concerns about the deal.
