A dozen US states have joined together to block the $110bn (£85bn) merger between Warner Bros and Paramount, claiming the largest media consolidation in Hollywood history would stifle competition and raise consumer prices.
A lawsuit has been filed by 12 states, led by California, where Paramount and Warner Bros keep their headquarters and production studios.
California Attorney General Rob Bonta claimed the merger would end up harming “audiences on every sofa and movie theater seat in the US”.
If it goes ahead, the new company would account for over a quarter of major film releases. Together with Disney, Universal and Sony, just four conglomerates would control 86% of that market.
US news website Semafor reported that David Ellison, the controlling owner and chief executive of Paramount Skydance and son of tech billionaire Larry Ellison, has been urged by advisers to move the company’s operations out of California. Paramount has been based in the state for more than 100 years.
Bonta told BBC World Service that he was aware of the report.
“I heard that as an explicit statement. I’ll even say it felt like a threat last night, and it felt like a last-ditch effort to blackmail the regulators into allowing an illegal deal to go through,” he said.
“It didn’t work. It won’t work. It doesn’t work.”
Paramount declined to comment on whether it was considering shifting the company out of the state, or to respond to Bonta’s interview.
Combining Paramount and Warner Bros would end a century of fierce rivalry between two of Hollywood’s biggest hitmakers.
Between them, they own legendary franchises like Harry Potter, Batman, Mission: Impossible, and Top Gun, as well as TV channels CNN, MTV and Nickelodeon.
The regulatory challenge marks a significant hurdle for the entertainment giants as they attempt to merge operations.
In June, the US Department of Justice approved the merger, but the coalition of attorney generals has requested that the companies halt the transaction pending judicial review, threatening a temporary restraining order if they do not comply.
If approved, the combined titan would control nearly a third of the US theatrical motion picture market and basic cable programming.
Bonta claimed it 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 US”.
The legal challenge focuses on three main areas: major cinema releases, massive blockbusters, and cable TV channels.
The states argue that losing this competition strips movie theaters and television networks of vital bargaining power. At present, if one studio demands unfair prices, a distributor can walk away and deal with the rival.
Without that option, the lawsuit argues that theaters and TV networks will face higher fees – costs that will eventually hit consumers through pricier tickets, high cable bills, and fewer choices.
“Nothing justifies these substantial harms to competition,” the lawsuit states.
However, supporters of the deal point out that the traditional media world is in crisis.
Cable TV audiences are shrinking rapidly, and cinema attendance faces intense, ongoing pressure from tech giants and streaming platforms, making scale an economic necessity.
In a statement, Paramount described the lawsuit as “fundamentally flawed” and “wrong,” adding that it would “vigorously defend the transaction”.
It added: “Delaying this transaction will only harm entertainment workers who have already suffered over recent years as technology has disrupted their livelihood and cost California tens of thousands of entertainment jobs.”
Warner Bros has been contacted for comment.
By BBC
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