A coalition of 12 states filed an antitrust lawsuit on Monday to block the merger of Paramount Skydance and Warner Bros., defying the Department of Justice, which approved the deal last month.
The coalition, led by California Attorney General Rob Bonta, alleges that the $111 billion transaction violates the Clayton Act by lessening competition in three distinct markets: wide-release theatrical distribution, “top-grossing” theatrical distribution, and basic cable licensing.
“The unlawful merger of these two entertainment behemoths would lead to higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately, audiences on every sofa and movie theater seat in the U.S.,” Bonta said in a statement on Monday.
The suit argues that the combined company will control 27% of the wide-release theatrical distribution market, 30% of the submarket comprising “anticipated blockbuster films,” and 27% of the basic cable bundle. The states argue that such consolidation will harm theaters and cable and satellite providers that rely on competition among distributors.
Paramount and Warner Bros. are two of the five remaining legacy studios. Together, all five — including Disney, Sony and Universal — control 86% of theatrical distribution and 90% of blockbuster distribution, the states said. Warner Bros. and Paramount are also the second- and third-largest basic cable distributors, respectively.
