US: 12 states challenge Paramount's buyout of Warner
The states have filed a lawsuit arguing that a merger of Hollywood giant studios Paramount and Warner would "extinguish competition" and increase consumer prices.
A total of twelve US states have sued to block Paramount Skydance's $110 billion (€96.2 billion) acquisition of Warner Bros. Discovery, the largest-ever merger in Hollywood, arguing that the deal would hurt competition and raise prices in film and television.
The California-led legal action, filed in Oakland federal court on Monday, challenges Paramount CEO David Ellison's ambitions to transform his media company into a major rival of Netflix and Disney.
The lawsuit comes after the transaction was green-lighted by the US Justice Department (DOJ) without conditions. The DOJ said the acquisition was unlikely to harm competition or consumers.
California Attorney General Rob Bonta, who is leading the case, called the merger of two of Hollywood's last five legacy studios "unlawful" and stressed that it would result in "higher prices, lower quality, and less content" for audiences.
"Audiences on every sofa and in every movie (theater) seat would feel the impact of this unlawful merger," Bonta said as he addressed a news conference.
Monday's suit argues that the tie-up would violate antitrust law.
"After this merger, for every dollar generated by wide-release theatrical films and basic cable channels in this country, the combined company will pocket more than a quarter," the states said in the lawsuit.
They asserted that the deal would create a "media behemoth."
Paramount sees the lawsuit as distorting settled antitrust law and as a misrepresentation of competition in the entertainment industry.
Reacting to the suit, Paramount on Monday said that the combination of the two film distributors would instead 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 buyout is also undergoing antitrust reviews outside the US, including in Europe.
In the coalition with Bonta against the Paramount-Warner union are the attorney generals of Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington, all Democrats.
Critics of the merger have said Paramount's political connections facilitated a smooth road to the June clearance by the US Department of Justice.
Paramount CEO Ellison's father is billionaire Oracle co-founder Larry Ellison, who is a close ally of President Donald Trump and a major donor to the Republican leader's political campaigns.
"Something happened and perhaps that something had to do with a mega-billionaire named Ellison," Arizona Attorney General Kris Mayes told the media on Monday.
"We are seeing more and more instances where the Trump DOJ is just rolling over for corporate consolidation," she added.
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