12 US states sue to block Paramount Skydance's $110 billion Warner Bros. Discovery takeover, setting up antitrust clash

A coalition of 12 states, led by California, filed an antitrust lawsuit in federal court on Monday seeking to block Paramount Skydance's $110 billion acquisition of Warner Bros. Discovery. The suit comes roughly a month after the Justice Department under the Trump administration cleared the deal without conditions, a decision that reportedly surprised career antitrust staff who had been leaning toward recommending a challenge.

The legal attack

The complaint, filed in the US District Court for the Northern District of California, alleges the merger violates the Clayton Act by substantially lessening competition in three markets: wide-release theatrical distribution, top-grossing blockbuster distribution, and basic cable licensing. California Attorney General Rob Bonta framed the action in stark terms.

With this lawsuit, California and our sister states are fighting for free and fair markets, not rigged markets. America has no kings in government or our economy.

The 11 other states joining California are Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington. The group has asked Paramount and Warner Bros. Discovery not to close the deal until judicial proceedings conclude and said they will seek a temporary restraining order if the companies refuse.

Market concentration at the core

According to the lawsuit, the combined entity would control roughly 27% of the US market for wide-release theatrical films, 30% of anticipated blockbusters, and 27% of the basic cable bundle. The deal would reduce the number of major film distributors from five to four, with those four collectively controlling 86% of wide-release movies. On the television side, the merged company would own more than 50 basic cable channels, including CNN, TBS, TNT, Cartoon Network, HGTV, MTV, Nickelodeon, and Comedy Central.

The states argue the consolidation would give the company "enormous bargaining power" over movie theaters and cable providers, likely driving up ticket and subscription prices while reducing the volume and diversity of films released. Paramount Skydance CEO David Ellison has pledged to release at least 30 films theatrically each year across both studios and to combine HBO Max with Paramount+ to compete with Netflix.

Industry and labour allies

Cinema United, the trade group representing movie theaters, endorsed the suit. President and CEO Michael O'Leary said the consolidation would harm small businesses far beyond Hollywood.

The ramifications of further movie studio consolidation will be significant and lasting, not just in Hollywood, but on Main Streets across this nation where local movie theaters serve as cultural and financial cornerstones for communities of all sizes.

The Writers Guild of America also backed the legal challenge, stating it had "engaged with the offices of many State Attorneys General" to argue against the merger. New York mayor Zohran Mamdani added his support, saying workers "should not be sacrificed for the sake of further corporate consolidation."

Political and financial pressures

Paramount called the lawsuit "fundamentally flawed and wrong on both the facts and the law," arguing that streamers like Netflix, Amazon, and Apple have already reshaped the competitive landscape. The company noted that Disney's absorption of most of Fox's Hollywood assets in 2019 proceeded with regulatory approval on similar reasoning.

The political dimension is inescapable. David Ellison is the son of Oracle co-founder Larry Ellison, a close Trump ally who has sat on a White House advisory board. Paramount previously reached a $16 million settlement with Trump over a claim about a CBS "60 Minutes" interview and agreed to install what FCC Chairman Brendan Carr called a "bias monitor" at CBS. A Semafor report on Sunday said Paramount is considering moving its corporate headquarters out of California in response to the state's legal offensive.

The stakes are high for the deal's timeline. Paramount has committed to paying Warner Bros. Discovery shareholders a 25-cent per share quarterly ticking fee (roughly $650 million) if the merger is not closed by September 30, 2026. California, meanwhile, hired the law firm Milbank to bolster its case, bringing on attorneys including James Weingarten, a former government antitrust lawyer who worked on the unsuccessful challenge to Microsoft's Activision Blizzard acquisition. Paramount's defence team includes former US Solicitor General Paul Clement.