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A lawsuit has been filed challenging Paramount’s massive $110 billion deal for Warner Bros. Discovery, the opening legal deal for a merger that will reshape Hollywood.
Paramount subscribers, in a lawsuit filed Thursday in federal court in California, allege that the acquisition will significantly reduce competition in streaming, news and theatrical distribution in violation of antitrust laws. They are seeking a court order blocking the merger and unwinding Skydance’s acquisition of Paramount.
The deal would enhance Paramount’s “ability and incentives to raise prices, reduce production, narrow menus, reduce quality, and worsen consumer-facing conditions, including through control of distribution, exclusivity, windowing, and licensing,” the complaint states.
The lawsuit is believed to be the first legal action targeting the merger that will combine two legacy Hollywood studios. Consumers are one of several groups that could pose an obstacle to completing the deal, which includes the Justice Department, state attorneys general, the European Union and the Federal Communications Commission.
“Paramount/Warner Bros. is not a done deal,” California Attorney General Rob Bonta said in February, hours after Netflix declined to raise its bid for the David Zaslav-led company, making Paramount the winner of the bidding war. “These two Hollywood giants have not passed regulatory scrutiny – the California Department of Justice has an open investigation, and we intend to be active in our review.”
Paramount said in a statement that the lawsuit was “baseless.” “The combination of Paramount and WBD will create a stronger competitor well positioned to serve as a champion of creative talent and consumer choice,” she added.
In the lawsuit, consumers say the deal would significantly reduce competition in streaming and cable TV. The combined entity will have the third-largest streaming platform after Netflix and Disney with $17.9 billion in streaming business, according to the complaint, which notes that Warner Bros. Discovery and Paramount ranked third and fourth, respectively, on the top streaming services in 2024. The lawsuit claims the company will have the second-largest streaming platform by subscribers, though it doesn’t appear to take into account consumers who have both services.
Paramount CEO David Ellison framed the deal as one that would boost competition in a big battle against tech giants like Netflix, Amazon and Apple. He has pledged to release at least 30 films a year theatrically with theatrical windows of at least 45 days.
But this commitment has drawn criticism from some in the industry who question its ability to maintain that production. In fact, Consumers claims the deal will leave “moviegoers with fewer theatrical titles, less diversity in genre and budget,” as well as “fewer meaningful alternatives at local theaters.”
If the merger is allowed, the company would control approximately 24 percent of the theatrical distribution market, making it the largest theatrical distributor, according to the complaint. “Therefore, the proposed transaction would not only combine the two studios, but would increase the concentration of the top four by approximately 10.2 percentage points and eliminate Paramount as an independent competitor to the studios,” Joseph Alioto, an attorney for the subscribers, wrote in the lawsuit.
Earlier this month, Warner Bros. investors voted to… Discovery in favor of merging with Paramount. The Justice Department has yet to give its blessing, though President Trump previously inserted himself into the bidding war to undercut Netflix’s bid in what was largely seen as a boost for Paramount.
Pointing to reports that Trump favors Paramount’s acquisition of Warner Bros. Discovery, the lawsuit says the merger would diminish the editorial independence, credibility and viewpoint independence of the combined entity. According to the complaint, the company will be the second-largest news media entity after Comcast.
Overall, the lawsuit contends that the merger should be blocked, in part, because Skydance has grown through acquisition rather than true competition. The Clayton Act prohibits mergers that would significantly reduce competition or tend to create a monopoly. Underlying antitrust law in the United States has also been interpreted to take into account acquisitions that contribute to or accelerate a trend toward concentration by narrowing the field of significant competitors. Since 2010, the entertainment industry has seen mergers involving Paramount, Skydance, Disney, 21st Century Fox, Discovery, and WarnerMedia.
“Skydance’s non-trivial acquisition of Paramount Global and the proposed non-trivial acquisition of Warner Bros. Discovery reflect the same strategy of refusing to compete by building better products, investing, innovating, or winning customers by competing on merit, but instead pursuing scale through consolidation that eliminates independent competitors and weakens competitive constraints that protect consumers,” states the complaint, which looks to force a divestment.
California is currently investigating the merger. He would almost certainly lead any effort to file a lawsuit from state attorneys general to block the deal if it were brought.
