States Take Final Steps to Challenge Paramount’s Media Dominance
A group of twelve state attorneys general is working to halt the $110 billion merger between Paramount and Warner Bros Discovery, citing concerns that it could lead to higher movie prices and negatively impact cable TV providers. The states involved—California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington—filed a lawsuit on Monday, claiming that the merger would unlawfully stifle competition and create a “media behemoth.”
Last month, the Justice Department chose not to intervene in the merger, a decision that reportedly surprised some staff who were inclined to recommend legal action. However, former DOJ acting antitrust chief Omeed Assefi dismissed these claims as “not accurate” in an interview.
The lawsuit argues that the merger would consolidate two of the five major film distributors and basic cable channel owners, allowing the new entity to capture over a quarter of the revenue generated by wide-release films and basic cable channels in the U.S. Paramount responded by stating that the lawsuit misrepresents the current competitive landscape in the entertainment industry and warned that delaying the merger would negatively affect consumers and talent in the entertainment sector.
The merger has raised concerns in both Hollywood and political arenas, particularly because it would place CNN under the leadership of David Ellison, the son of a close ally of former President Donald Trump. Some former CBS journalists have expressed worries about potential political interference in programming, especially after Ellison appointed Bari Weiss, founder of The Free Press, to lead the network, with reports indicating a decline in ratings under her direction.
If the lawsuit delays the merger from closing by September 30th, it could be financially burdensome for Paramount, which has agreed to a 25 cent per share “ticking fee” to Warner Bros Discovery shareholders for each quarter of delay, amounting to approximately $650 million per quarter.
