Paramount Skydance’s plan to acquire Warner Bros. Discovery has hit its biggest legal obstacle yet, after 12 US states filed an antitrust lawsuit seeking to block the approximately $110 billion media merger.
The states argue that combining two of Hollywood’s five major film distributors and basic cable operators would reduce competition, raise prices, threaten entertainment jobs and give one company excessive control over film, television and news.
TL;DR
- California and 11 other states sued to block Paramount’s Warner Bros. Discovery acquisition.
- The coalition says the combined company would control nearly one-third of key theatrical and cable markets.
- Paramount says the lawsuit misrepresents the market and would protect larger streaming rivals.
- The US Justice Department previously cleared the transaction after an eight-month review.
Why Are 12 States Suing Paramount And Warner Bros.?
California Attorney General Rob Bonta is leading the lawsuit alongside Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.
The complaint was filed in federal court in Oakland, California, and alleges that the acquisition violates the Clayton Act by substantially reducing competition in wide-release theatrical film distribution, top-grossing film distribution and basic cable licensing.
The states also filed for a preliminary injunction to prevent the companies from completing the transaction while the antitrust case moves through court.
“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,” said Bonta.
He added that the merger would lead to “higher prices, lower quality, and less content” while harming movie theatres, television distributors and audiences across the country.
According to the states, the combined company would control around 27% of US film distribution revenue, 30% of blockbuster film distribution and 27% of the basic cable channel market.
Paramount and Warner Bros. currently compete for cinema screens, release dates, licensing deals and industry talent. The coalition argues that removing this competition could increase costs for theatres and cable providers, with those expenses ultimately reaching consumers.
The proposed company would unite assets including Paramount Pictures, Warner Bros., CBS, CNN, HBO Max, Paramount+, MTV, Nickelodeon, Cartoon Network and HGTV.
What Did Paramount Say?
Paramount rejected the allegations, saying the lawsuit “distorts settled antitrust law” and misrepresents competition within entertainment.
The company said the combination would create a stronger rival to dominant technology and streaming platforms, while supporting theatrical releases and entertainment-sector employment. It vowed to “vigorously defend” the transaction.
Paramount has previously said the merger would allow the combined studios to release 30 films annually while generating around $6 billion in savings by eliminating overlapping infrastructure, marketing functions and corporate roles.
However, the states argue that the film commitment is unenforceable and would not prevent the company from raising prices or reducing content quality.
The DOJ Cleared The Deal, So What Happens Next?
The lawsuit comes one month after the US Department of Justice completed an eight-month investigation and concluded that the merger was unlikely to harm competition across streaming, linear television or theatrical film production and distribution.
The Justice Department said its review included more than two million documents from over 80 custodians. It concluded that the deal could increase competition and deliver benefits to consumers and workers.
The states reached the opposite conclusion and can pursue their own antitrust challenge despite the federal clearance.
Paramount hopes to close the deal during the third quarter of 2026. If it remains unfinished after September 30, shareholders are set to receive a quarterly ticking fee equivalent to around $650 million.
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Reuters found that comparable federal merger cases have taken an average of approximately eight months to reach a decision. A prolonged dispute could therefore increase Paramount’s costs, complicate its financing and potentially threaten the transaction itself.
For now, the merger remains alive, but its fate may no longer be decided by executives or federal regulators. It could come down to whether a federal judge agrees that creating one of Hollywood’s largest media companies would strengthen competition or extinguish it.
