A group of 12 state attorneys general led by California sued to prevent Paramount from buying Warner Bros Discovery on July 13.
The states claim the proposed merger would result in consolidating a 27% share of both the market for wide-release theatrical films and the market for licensing basic cable channels.
The coalition filed an emergency motion asking the court to stop the merger.
Traditional media remains under pressure
Leave all that aside for the moment, though. Box-office ticket sales have yet to recover from the pandemic, with 2025’s haul coming in 25% below 2019’s, according to Box Office Mojo. Theater operators Cinemark CNK.N, Marcus MCS.N and AMC Entertainment AMC.N have seen their stocks fall 14%, 31% and 95%, respectively, since the end of that pre-Covid year. Meanwhile, cable television subscriptions are in free-fall as streamers like Amazon.com AMZN.O, Apple AAPL.O and Netflix dominate NFLX.O.
The industries that the plaintiff states identify are, indeed, in trouble. That’s because traditional media is coming unglued. This deal may not help: despite a promise to release 30 films in theaters per year, Paramount’s groaning prospective debt pile has drawn a negative outlook from ratings agency S&P Global. Whether it happens or not, though, Hollywood’s old world is fading.
The case centers on market definition and delay costs
Paramount is looking to consolidate cable networks CNN, TNT and MTV under one roof, as well as over 30% of revenue from blockbuster “tentpole” movies like "Mission: Impossible" released in theaters. The states say that this could increase negotiating leverage over cinema chains and cable distributors, in turn forcing them to jack up the prices of movie tickets or pay-TV packages.
Convincing a judge that blockbusters form a valid market for analysis may prove to be the decisive part of the argument. Paramount’s share of other proffered markets won’t exceed the crucial 30% threshold.
Whatever happens, any delay is costly. If Paramount does not close the deal before October, it will have to pay $650 million in quarterly fees until the union is sealed. The company, for its part, said the case is “wrong on both the facts and the law.” Investors seem unmoved: Warner’s stock price rose slightly on Monday.
States sue to block Paramount’s Warner Bros. Discovery deal
California Attorney General Rob Bonta is suing to block Paramount PSKY.O boss David Ellison from buying Warner Bros Discovery WBD.O for $110 billion. The merger does pose concerns, and local governments are picking up slack from easing federal scrutiny. Yet the tragic flaw in this fight is that it’s stuck in the past.
Along with counterparts in 11 states including New Jersey, New York and Arizona, Bonta is seeking to stop the sale of the HBO owner and studio behind the Harry Potter franchise. In a press conference on Monday, he claimed that Paramount’s quick work getting sign-off from the Department of Justice may reflect the Ellisons’ close ties to the White House. More generally, the Feds are settling antitrust cases more often than under former President Joe Biden.
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