States file lawsuit to block Paramount’s acquisition of Turner parent company

A coalition of state attorneys general have filed suit to block Paramount Skydance’s $110 billion acquisition of CNN-parent Warner Bros. Discovery, a contentious merger some warn could harm competition across the entertainment industry.

California, Arizona, Colorado, New Jersey and New York are among the 12 states involved in the lawsuit. Georgia, which remains a key nerve center for Warner Bros., is not involved in the suit.

The coalition said in a news release the combined media company, if allowed to merge, would control nearly one-third of theatrical motion pictures and nearly one-third of basic cable programming.

Combining Paramount and the Warner businesses would stitch together CBS, CNN, TNT, Discovery, HBO, HGTV and other networks, along with intellectual property such as DC Comics and the Harry Potter film franchise, as well as the Paramount+ streaming service. The combined company will carry a massive debt load, totaling more than $40 billion.

The AGs, all Democrats, are asking the two companies not to close the merger until after the judicial process concludes; if they do not agree, the coalition will file a temporary restraining order.

In a statement, Connecticut Attorney General William Tong said the merger will create “a media behemoth capable of controlling and crushing the American film and television industry, with dire consequences for consumers, local theaters and the workers and communities who rely on them, actors and artists, and for quality, objective and independent news.”

“We are suing today to block this merger and to protect free and fair competition,” Tong said in the statement.

In its own statement, Paramount said the complaint filed by the state attorneys general “distorts settled antitrust law and is based on a misrepresentation of competition in the entertainment industry today.” It added the merger will create a company capable of investing more aggressively in premium content, theatrical releases and creative talent.

“We will fight any effort to block a merger that has clear benefits for consumers, creators, and the wider entertainment industry, and where the alternative is to entrench a failing status quo,” Paramount said.

Although Georgia Attorney General Chris Carr is not involved in the lawsuit, the merger will likely have an impact on both consumers and the workforce — the extent to which is unclear. Consumers could pay more for streaming, cable or movie tickets, as well as face fewer choices in both entertainment and news programming, as Paramount will control both CBS News and CNN, one of the centerpiece networks founded by Ted Turner and now owned by Warner Bros. Discovery. What remains of the Turner employees left in Atlanta, who have endured several mergers over the past several decades, could face another round of job cuts. Film professionals could also see less work.

Last month, a roundtable discussion to discuss the acquisition was held at the Plaza Theatre with U.S. Rep. Hank Johnson, D-Lithonia, and Alvaro Bedoya, a former Federal Trade commissioner and senior adviser to the American Economic Liberties Project. During his remarks, Bedoya encouraged film and TV workers to send letters to Carr and ask him to challenge the merger.

The lawsuit, filed in U.S. District for the Northern District of California, alleges the merger violates Section 7 of the Clayton Act, according to the release. This holds that mergers that may substantially lessen competition or tend to create a monopoly are illegal.

The U.S. Department of Justice cleared the landmark merger June 12. It wrote in a news release announcing the decision that the Warner properties have been repeated acquisition targets in the media and entertainment industry for years. The transactions illustrate the challenges that arise when a deal that makes business sense isn’t aligned with “the competitive incentives of the acquiring firm or the competitive evolution of the marketplace,” the DOJ said.