Paramount Skydance’s (NASDAQ:PSKY) proposed $110 billion acquisition of Warner Bros. Discovery, Inc. (NASDAQ:WBD) is facing a legal hurdle after a coalition of 12 states filed an antitrust lawsuit seeking to block the deal.
12 States Challenge Paramount-Warner Bros. Merger
California, New York, Arizona, Minnesota and nine other states filed a lawsuit in federal court in Oakland, arguing that combining Paramount and Warner Bros. Discovery would create a media giant with excessive market power.
According to the complaint, the merged company would control about 27% of theatrical film distribution, 30% of blockbuster movie distribution and 27% of the U.S. basic cable market.
The states argue that reduced competition could translate into higher prices for moviegoers, cable and streaming customers while limiting choices for consumers.
The lawsuit also contends that the merger could hurt theaters, television distributors and entertainment workers, including writers, actors and production crews.
Paramount has defended the transaction, saying it would eliminate roughly $6 billion in overlapping costs while enabling the combined studio to release 30 films annually.
The states, however, argued that the commitment is unenforceable and would not prevent the company from raising prices or reducing quality after the merger.
Paramount and Warner Bros. Discovery did not immediately respond to Benzinga’s request for comments.
Mamdani, Warren And State Leaders Back Lawsuit
New York City Mayor Zohran Mamdani (D-N.Y.) welcomed the legal challenge, writing on X that he was “proud” New York joined the lawsuit.
He argued the merger does not serve the public and warned it could “raise prices for streaming and cable, endanger the livelihoods of thousands of New York artists and entertainment workers, and threaten to shutter theaters across our city.”
New York Attorney General Letitia James said the merger would create “a massive company with unprecedented power and influence,” while California Attorney General Rob Bonta said it would lead to “higher prices, lower quality, and less film and television content.”
Sen. Elizabeth Warren (D-Mass.) also endorsed the lawsuit, calling the proposed transaction an “antitrust nightmare” and adding, “Good news: the states are stepping up to BLOCK this antitrust nightmare. This fight isn’t over.”
The legal challenge could delay the merger for months, potentially increasing costs for Paramount as the case moves through federal court.
Price Action: Shares of Paramount closed 1.49% higher at $9.55 on Monday, while Warner Bros. gained 1.88% to close at $27.09, according to Benzinga Pro.
According to Benzinga Edge Stock Rankings, Paramount shares remain in a negative trend across the short, medium and long term.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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