A group of 12 state attorneys general filed a complaint Difficult Monday Paramount Skydance project to acquire Discovery of Warner Bros..
The lawsuit, which comes after weeks of speculation about whether and when it would be filed, seeks to block the merger on antitrust grounds. CNBC David Faber reported earlier today that the trial is expected to take place on Monday.
The merger deal would combine two renowned movie studios – Paramount and Warner Bros. – as well as the streaming platforms Paramount+ and HBO Max. Primordial David Ellison, CEO previously said the streaming services would become one after the deal.
It would also mean the creation of the largest portfolio of television networks in the United States, bringing together Paramount’s CBS broadcast network and pay TV channels like MTV and BET with WBD’s CNN, TNT and others.
Led by California Attorney General Rob Bonta, the trialwhich was filed in the U.S. District Court for the Northern District of California, is also filed by the attorneys general of Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington.
“The illegal merger of these two entertainment giants would result in higher prices, lower quality and less content for film and television, harming movie theaters, basic cable providers and, ultimately, the audiences sitting on every couch and movie theater seat in the United States,” Bonta said in a statement.
In a lengthy statement released Monday, a Paramount spokesperson called the lawsuit “a misrepresentation of competition in the entertainment industry today,” adding that it plans to “vigorously defend the transaction and demonstrate that this challenge is inconsistent with sound competition policy and the competitive realities of the media marketplace.”
“Delaying this transaction will only hurt entertainment workers who have already suffered in recent years as technology has disrupted their livelihoods and cost tens of thousands of California entertainment jobs,” Paramount’s statement continued.
The complaint filed Monday raised concerns about the size of the combined company, adding that the combined entity would control nearly a third of the movies and nearly a third of the basic cable television programming.
The attorneys general asked Warner Bros. and Paramount not to close the merger before the end of the legal proceedings and threatened to file a temporary restraining order if they did not comply.
On Monday, Bonta held a press conference in front of the Hollywood Sign in Los Angeles, reiterating arguments made in the lawsuit.
“This merger would stifle competition, drive up prices, decrease the quality of content and produce fewer movies and shows each year,” Bonta said during the press conference. “We have antitrust laws and merger controls for good reason, because competition is the lifeblood of a healthy, vibrant economy.”
Paramount countered in Monday’s statement, saying the merger would “create a stronger, well-capitalized, creatively-focused media company better positioned to compete with companies like Netflix that have come to dominate the industry in terms of viewership, premium content and creative talent.” Simply put, any attempt to block this transaction undermines the very principles that antitrust law is supposed to promote: more competition, more choice for consumers, and more opportunity for creators and workers.
The merger won WBD shareholder approval in April, and Ellison said on a recent earnings call, it was on track to close by September.
Paramount may face additional costs if closing the deal is delayed. As part of the proposed merger, Paramount agreed to pay what is known as ticking feeswhich comes into force if the closing exceeds September 30. Paramount set the fee at an additional 25 cents paid to WBD shareholders per quarter until closing.
The fee would equate to approximately $650 million in cash value per quarter for each quarter in which the transaction does not close.
Hollywood has previously expressed concerns about the combination, citing the likelihood of fewer film releases and the potential for industry job losses. Ellison promised that once united, the movie studios would produce a list of 30 films per year and said he is committed to protecting jobs.
Following Monday’s filing, television and film writers’ union The Writers Guild of America and Cinema United, the world’s largest exhibition trade association, issued statements supporting the coalition’s position on the deal.
“The merger of two of Hollywood’s largest studios will reduce competition in our industry, leading to fewer jobs, lower wages for entertainment workers, less variety of programming and higher prices for consumers,” the WGA said in a statement, adding that it had spoken with attorneys general about the perceived impact of the merger.
Michael O’Leary, president and CEO of Cinema United, said in a statement: “The ramifications of further movie studio consolidation will be significant and lasting, not only in Hollywood, but on the main streets of this country, where local movie theaters serve as cultural and financial cornerstones for communities of all sizes.” »
Ellison first set his sights on WBD last September. Just weeks after Paramount and Ellison’s Skydance finalized their merger, the company launched its first bid for WBD, resulting in multiple offers and a formal sales process.
WBD has finally signed a deal to sell its movie studio and streaming assets to Netflix. However, Paramount launched a hostile takeover bid and subsequently modified his offer. Netflix abandoned his agreementand Paramount walked away with a deal to buy all of WBD for $31 per share.
The deal has faced intense scrutiny from lawmakers in the United States and Europe, particularly regarding foreign financing this was part of Paramount’s offer. In mid-June, the Antitrust Division of the US Department of Justice approved the merger, ridding it of federal concerns.
“The Division has completed its analysis of the proposed merger of Paramount and Warner Bros. and has determined, based on the evidence received during its investigation, that the transaction is not likely to result in harm to competition or to U.S. consumers,” the department said in his determination.
The merger has also gained approval from several global jurisdictions as it moves closer to a potential closing.
However, the European Union is still reviewing the agreement for approval, with a new provisional deadline. deadline set for July 22. The European Commission said in a public document this month that Paramount had submitted concessions in an effort to allay concerns about the deal.
