A coalition of U.S. states is preparing to challenge Paramount’s proposed $110 billion acquisition of Warner Bros. Discovery, potentially setting up one of the biggest antitrust battles in the media industry in years as state officials intensify scrutiny of major corporate mergers.
The move comes weeks after the U.S. Department of Justice reportedly approved the proposed acquisition, removing one of the biggest regulatory hurdles facing the deal.
According to two sources cited by Reuters, the states could file a lawsuit as early as next week to block or delay the transaction, arguing that the combination would substantially reduce competition in the entertainment sector.
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The lawsuit would represent a significant test of state-level antitrust enforcement at a time when federal regulators have taken a comparatively less aggressive approach to large mergers under President Donald Trump’s administration.
California Leads Multistate Investigation
California Attorney General Rob Bonta is leading the investigation into whether the proposed acquisition violates federal and state antitrust laws designed to prevent mergers that could lessen competition or create excessive market concentration.
Reuters previously reported in early June that California, New York, and several other states were preparing legal action, reflecting a growing willingness among state attorneys general to pursue antitrust cases independently when federal regulators decline to intervene.
Legal experts say state attorneys general have broad authority to challenge mergers they believe would harm consumers, workers or competition, even if federal agencies choose not to file suit.
If completed, the transaction would combine Paramount Pictures with Warner Bros., creating one of the world’s largest entertainment companies and bringing together two of Hollywood’s four major film studios under a single corporate owner.
The combined company would own an extensive portfolio of film franchises, television production studios, streaming services, and entertainment assets.
Warner Bros. controls major franchises including Harry Potter, Superman, The Lord of the Rings, and DC Comics, while Paramount owns globally recognized properties such as Mission: Impossible, Transformers, Star Trek, Top Gun, and SpongeBob SquarePants.
Beyond film production, the merger would unite major television networks, premium cable assets and streaming platforms, giving the combined company greater scale as it competes against rivals such as Netflix, Disney and Amazon.
Paramount has noted that consolidation is necessary as traditional media companies contend with declining cable television revenues, rising content production costs, and fierce competition from global streaming platforms.
Chief Executive David Ellison has said the merger would strengthen the company’s ability to compete for audiences, creative talent, and investment capital.
Industry Groups Fear Reduced Competition
The proposed transaction has nevertheless generated strong opposition across the entertainment industry. Actors, writers, and other creative professionals have warned that combining two major studios could lead to substantial job losses as overlapping operations are consolidated.
Industry unions have also expressed concerns that fewer major studios could reduce opportunities for filmmakers, production workers, and creative talent. Movie theater owners have emerged as another influential group opposing the merger. They note that combining Warner Bros. and Paramount Pictures could reduce the number of theatrical releases, limiting consumer choice while weakening competition among studios for cinema screens.
In response to those concerns, Ellison has pledged that the merged company would continue releasing approximately 30 theatrical films each year, seeking to reassure exhibitors that the combined studio would remain committed to cinema distribution.
Even if the lawsuit ultimately fails, legal proceedings could significantly delay completion of the transaction. Courts often issue preliminary injunctions that temporarily prevent mergers from closing while antitrust litigation proceeds, a process that can take several months.
Such delays could become increasingly expensive for Paramount. Following completion of the acquisition, the company is expected to carry approximately $80 billion in debt, making the timing of the transaction financially important.
The merger agreement also contains provisions that increase costs if regulatory or legal challenges postpone closing. Under the terms negotiated by David Ellison, Paramount has agreed to pay Warner Bros. Discovery shareholders a “ticking fee” of 25 cents per share if the transaction is not completed before October.
That provision would cost Paramount roughly $650 million in cash every quarter until the acquisition closes, increasing pressure on the company to resolve any legal challenges quickly.
A prolonged court battle could also postpone the realization of approximately $6 billion in anticipated cost savings that Paramount expects to achieve by integrating the two companies’ operations.
Those synergies are considered central to the financial rationale behind the acquisition, with savings expected to come from eliminating duplicate corporate functions, streamlining production operations, and combining technology infrastructure.
Federal Approval Did Not End Scrutiny
Market analysts have suggested that Paramount encountered fewer obstacles at the federal level than many had expected.
Some observers have pointed to the company’s political connections as one factor that may have contributed to a smoother path through Washington’s regulatory review, although no evidence has emerged that political relationships influenced any official decisions.
David Ellison’s father, Oracle co-founder Larry Ellison, has maintained ties with President Donald Trump, a relationship that has attracted attention during the regulatory review process. However, the apparent absence of a major federal antitrust challenge has not prevented state officials from conducting their own investigations.
State attorneys general possess independent authority to enforce antitrust laws and have increasingly exercised that power in recent years, particularly in cases involving large technology, healthcare, and media companies.
What Comes Next?
Although not every lawsuit seeking to block a merger succeeds, coordinated legal action by multiple states would introduce fresh uncertainty into one of the largest media transactions in recent history.
The exact timing of any filing remains subject to change as attorneys general continue coordinating their legal strategy.
If the states secure a court order delaying the merger, Paramount and Warner Bros. Discovery could be required to continue operating as separate companies until litigation concludes, postponing operational integration and delaying billions of dollars in expected savings.