Quiet on the Set! Attorney General Bonta Secures Critical, Early Win in Lawsuit to Block Warner Bros./Paramount Merger

OAKLAND — California Attorney General Rob Bonta today issued the following statement after the U.S. District Court for the Northern District of California granted the states’ request for a temporary restraining order halting the merger of Warner Bros. Discovery, Inc. (Warner Bros.) and Paramount Skydance Corporation (Paramount). The temporary restraining order halts the merger while the court considers a ruling on a preliminary injunction, which would block the merger for the duration of the litigation. Earlier this week, Attorney General Bonta led a coalition of 12 attorneys general in filing a lawsuit challenging the unlawful merger, which is expected to result in higher prices, lower content quality, and fewer movies and TV shows. The proposed $110 billion merger — the largest in Hollywood history — would combine two of Hollywood’s five major film distributors and two of the five major owners of basic cable channels, extinguishing competition between Paramount and Warner Bros., and inflicting substantial harm on movie theaters, basic cable distributors, and ultimately, audiences nationwide.

“My office and attorneys general nationwide have secured an emergency order blocking the unlawful merger of Warner Bros. and Paramount. This is a critical first win in our case to ensure this megamerger never sees the light of day," said Attorney General Bonta. “History tells the tale of what happens when a few people have great power over markets that are central to Americans' lives: fewer opportunities for more people, worse products and services for all people. With our lawsuit, we’re fighting for a free and fair market and a thriving film and television industry that serves creatives and audiences alike. We have a full tank of gas, the law on our side, and look forward to continuing to make our case.”

BACKGROUND

For more than a century, Warner Bros. and Paramount have stood astride the film and television industry as independent sources of creativity and competition. The lawsuit alleges that the merger violates Section 7 of the Clayton Act, which holds that mergers that may substantially lessen competition or tend to create a monopoly are illegal. The attorneys general allege that, if Warner Bros. and Paramount are allowed to merge, it would lessen competition in three markets: film distribution, anticipated blockbuster film distribution, and and licensing cable TV channels. 

Currently, Paramount and Warner Bros. compete fiercely to create and distribute new, different, and innovative film and television content to American viewers. Movie theaters and TV distributors rely on competition between Paramount and Warner Bros. to incentivize creativity and secure competitive prices and terms for themselves and for audiences. TV distributors negotiate with Paramount, Warner Bros. and other cable channel owners to acquire the rights to distribute that content to subscribers. Alternatives are essential in these negotiations as is the leverage that each entertainment company provides to TV distributors and movie theaters. For example, if Paramount insists on onerous financial terms, its negotiating partner can gain leverage by turning to Warner Bros. and vice versa. Paramount’s proposed acquisition of Warner Bros. will end this competition, threatening viewers with higher prices, the decline of theatrical exhibition of films, and a reduction in the variety, quality, and amount of content distributed.