California and 11 other U.S. states have filed a lawsuit seeking to block Paramount Skydance’s $110 billion acquisition of Warner Bros. Discovery, describing the largest merger in Hollywood history as a threat to competition in film and television.
The lawsuit, filed on Monday in a federal court in Northern California, marks a significant challenge to the United States Justice Department, which approved the transaction in June.
If completed, the merger would create a media giant controlling major assets, including CNN, Warner Bros. studios, and the HBO Max streaming platform.
The proposed takeover has also drawn political attention, with U.S. President Donald Trump previously saying he would weigh in on the deal as the future of CNN remains uncertain.
California Attorney General Rob Bonta, who is leading the coalition of states, said combining two of Hollywood’s five major film distributors would likely result in higher prices, lower-quality productions, and fewer content choices for consumers.
“In this country, no one is above the law. California and our sister states are fighting for free and fair markets, not rigged markets,” Bonta said.
The lawsuit alleges the merger violates the Clayton Act, a U.S. antitrust law that prohibits mergers likely to substantially reduce competition.
The states joining California in the legal action are Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.
Paramount dismissed the lawsuit as “fundamentally flawed,” arguing that the merger would strengthen its ability to compete with streaming giants such as Netflix, Amazon and Apple rather than reduce competition.
Paramount said the legal challenge would effectively protect dominant streaming platforms from meaningful competition.
The company also pledged to release at least 30 films annually with a minimum 45-day exclusive theatrical run.
According to the lawsuit, the combined company would control about 27 per cent of wide-release theatrical film distribution and a similar share of the basic cable television licensing market.
US clears Paramount’s $111bn Warner Bros takeover
The coalition has asked Paramount and Warner Bros Discovery not to complete the transaction until the case is resolved and warned it would seek a temporary restraining order if necessary.
Despite the state-level challenge, Paramount secured federal antitrust approval last month, a major victory for Chief Executive David Ellison.
The deal is largely financed by his father, Oracle co-founder Larry Ellison, a longtime ally and major political donor to President Trump.
The proposed takeover has also faced opposition within the entertainment industry, with hundreds of actors and directors signing a letter warning that further consolidation would reduce production opportunities and deepen the industry’s ongoing challenges after years of cost-cutting and mergers.
Industry analyst Ross Benes of Emarketer said the lawsuit may carry political significance but is unlikely to derail the transaction, arguing that state attorneys general lack the authority to block a merger that has already received federal approval.
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