US states sue to block Paramount-Warner Bros merger

A bipartisan coalition of US state attorneys general is attempting to block the $110 billion merger of Paramount Skydance and Warner Bros Discovery, filing a lawsuit on Monday that claims the deal would harm competition and lead to higher consumer prices.

The lawsuit is led by California Attorney General Rob Bonta, a vocal critic of the merger since it was agreed in February after a bidding war between David Ellison's Paramount Skydance and Netflix. The suit is joined by the states of Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.

"Today, I am leading a coalition of states in challenging the proposed merger of Warner Bros and Paramount and asking the court to block the deal," Bonta said in a statement. "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 US."

Bonta and his fellow attorneys general are now asking a judge to halt the merger until the judicial process concludes. "In this country, no one is above the law," he said. "With this lawsuit, California and our sister states are fighting for free and fair markets, not rigged markets. America has no kings in government or our economy."

The lawsuit was filed in the US District Court for the Northern District of California. The widely anticipated legal action comes weeks after the US Department of Justice approved the deal, removing a major hurdle. While dozens of countries have also cleared the merger, it still awaits approval from regulators in the UK and Europe. On June 30, UK Culture Secretary Lisa Nandy said she was "minded" to intervene and asked both the communications regulator Ofcom and the Competition and Markets Authority (CMA) to further investigate, which would delay the timeline.

Paramount Skydance and Ellison have maintained that the merger will boost competition and preserve Hollywood's theatrical status quo. "This deal is pro-competitive, resulting in a stronger company better positioned to compete against dominant technology platforms in an industry increasingly defined by intense competition for audiences, talent, technology and investment," the company said after receiving approval from the Trump administration.

Close ties between David Ellison, his father Oracle billionaire Larry Ellison, and members of the Trump administration have raised questions about whether the regulatory playing field was tilted toward approval despite concerns from actors, journalists, and many prominent politicians.

Paramount Skydance aims to close the deal by September 30, after which it has agreed to pay a "ticking fee" of an additional $0.25 per share each financial quarter until closing, potentially adding hundreds of millions of dollars to the final purchase price.

Some opponents grew frustrated that the long-rumored lawsuit had not materialized, especially ahead of the Justice Department's approval. But in an interview with the Guardian last month, Senator Elizabeth Warren said she "wouldn't draw a lot of inferences" from the delay, since the case required significant resources and coordination to decide "how they're going to pool their efforts to go up against a giant like Ellison."