California Attorney General Rob Bonta is leading a coalition of 12 state attorneys general in a lawsuit challenging Paramount’s planned $111 billion acquisition of Warner Bros. Discovery (WBD), calling the mega-merger “illegal” and arguing it would harm consumers, movie theaters, and cable distributors.
The lawsuit, filed in the U.S. District Court for the Northern District of California on July 14, claims the merger violates Section 7 of the Clayton Act, which prohibits mergers that may substantially lessen competition or tend to create a monopoly.
“We determined that law was being broken with respect to three markets, when it comes to wide-release theatrical films, their distribution, the distribution of top-grossing films, blockbusters if you will, and also with respect to the licensing of cable channels to cable distributors,” Bonta said on Matthew Belloni’s “The Town” podcast.
Paramont CEO David Ellison is seeking to acquire WBD in a deal expected to close during the third quarter of 2026. The merger would combine two of Hollywood’s major studios, and critics fear it would give too much power to Ellison’s Paramount while reducing competition in theatrical film distribution and cable channel licensing.
Bonta argued the consolidation 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.”
The lawsuit has prompted speculation that Paramount could relocate from California. A Semafor report indicated Ellison may consider moving the studio if the state continues to block the merger. Bonta dismissed the threat: “To threaten a state that is simply doing its job… it’s not something that we’re going to respond to by cowering or by backing down.”
Paramount countered in a press release that the lawsuit effectively “shields dominant streaming platforms like Netflix and technology companies from much-needed competition.” The company argued the merger would deliver “significant benefits for consumers, creators, workers, and the broader Hollywood economy.”
When asked why streaming giants like Netflix, Apple, and Amazon were excluded from the analysis despite accounting for 48% of U.S. viewing, Bonta said the streaming market was analyzed separately and the lawsuit focused on three specific markets where the merger’s impact is “presumptively illegal based on a clear threshold that the law has defined.”
The case represents a significant test of antitrust enforcement in the entertainment industry, with implications for Hollywood employment, content production, and consumer pricing across Los Angeles and beyond.
Sources: Fox Business, NBC Los Angeles
