California and 11 other American states have gone to court to block Paramount Skydance Corp’s proposed US$110 billion (A$145 billion) acquisition of Warner Bros. Discovery.
In a filing with the United States District Court for the Northern District of California, the states claim the merger would concentrate too much power in the United States entertainment industry to the detriment of consumers, businesses and creative workers.
California Attorney General Rob Bonta said he was leading a coalition of states in asking the court to block the deal.
“The unlawful merger of these two entertainment behemoths would lead to higher prices, lower quality, and less content for film and television, harming movie theatres, basic cable distributors, and ultimately, audiences on every sofa and movie theatre seat in the U.S.,” Bonta said in a press release.
“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 other states joining the lawsuit are Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.
The merged company would control nearly one-third of U.S. theatrical film distribution and basic cable programming, according to the lawsuit.
But Paramount said the lawsuit “distorts settled antitrust law” and the merger would create a “stronger competitor against dominant streaming and technology platforms who have harmed the market for theatrical exhibition and jobs in the entertainment industry.”
The transaction was approved by shareholders in April and won the support of President Donald Trump’s administration in June, after a bidding war with Netflix.
Warner Bros Discovery (NASDAQ: WBD) shares closed 50 cents (1.88%) higher at $27.09 on Monday (Tuesday AEST), capitalising the company at $67.92 billion.
Paramount Skydance (NASDAQ: PSKY) shares closed 14 cents (1.49%) higher at $9.55, capitalising the company at $10.69 billion.
