Twelve states seek to halt Paramount-Warner Bros. Discovery deal

California and 11 other states filed a federal antitrust lawsuit Monday seeking to block Paramount Skydance’s proposed $110 billion acquisition of Warner Bros. Discovery.

The lawsuit, filed in federal court in Sacramento, challenged the deal’s effects on wide-release theatrical film distribution, distribution of high-grossing films and the licensing of basic cable television channels. The Justice Department approved the transaction in June.

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The states alleged that the combined company would control more than a quarter of the revenue generated by wide-release theatrical films and basic cable channels in the United States.

“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 U.S.,” California Attorney General Rob Bonta said.

The coalition also included Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.

The states said the merger would leave three distributors controlling 75% of wide-release theatrical films. They also alleged that Paramount, Warner Bros. Discovery, Disney, Universal and Sony would account for most of the market for top-grossing theatrical releases after the transaction.

In the basic cable market, Warner Bros. Discovery and Paramount would have a combined 27% share, according to the lawsuit.

The coalition asked the companies not to complete the transaction before the judicial process concluded and said it planned to seek a temporary restraining order. Paramount’s agreement included a $7 million-per-day fee if the transaction did not close by Sept. 30.

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The legal challenge followed similar state-led efforts against media consolidation.

A federal judge previously put Nexstar Media Group’s proposed acquisition of Tegna on hold after state attorneys general and DirecTV raised antitrust claims, despite federal approval of that transaction.

The Paramount-Warner Bros. Discovery deal also remained under regulatory review outside the United States, including an investigation by the U.K. Competition and Markets Authority.