• by Wendy Davis , 8 hours ago

A California-led coalition of 12 state attorneys general on Monday sued to prevent Paramount Skydance from completing its proposed $110 billion acquisition of Warner Bros.

The merger "would extinguish competition between Paramount and Warner Bros. and inflict substantial harm on movie theatres, basic cable distributors, and, ultimately, audiences nationwide," the attorneys general allege in an antitrust complaint filed in federal court in the Northern District of California.

Warner Bros. agreed in March to be acquired by Paramount, which is controlled by Trump allies Larry Ellison and his son David Ellison. The Justice Department approved the deal last month, but state attorneys general are empowered to bring their own antitrust actions.

Paramount said Monday that the states' lawsuit "distorts settled antitrust law and is based on a misrepresentation of competition in the entertainment industry today."

The company added it will "vigorously defend the transaction and demonstrate that this challenge is inconsistent with sound competition policy and the competitive realities of the media marketplace."

The attorneys general allege that Paramount and Warner Bros. "compete fiercely to create and disseminate new, different, and innovative film and television content to American audiences," and also compete "to market their basic cable channels."

"The merger will end this competition permanently," the attorneys general allege in their complaint. "The likely result is higher prices, lower quality, and less content for film."

Among other allegations, the attorneys general say a combined Paramount-Warner Bros. would control more than 50 basic cable channels, giving the company more leverage with distributors.

"Its portfolio would span all major genres: news, sports, general entertainment, kids and family, and lifestyle," the complaint alleges. "The combined company’s essential basic cable content would confer enormous bargaining power. Few distributors could withstand the threat of a blackout of defendants’ more than 50 basic cable channels, leaving them little choice but to accept onerous terms."

The complaint also alleges that the merger would leave the country with just four major film distributors, and that a combined Paramount-Warner Bros. would control more than 30% of "anticipated blockbusters" -- essentially meaning big-budget films likely to earn more than $100 million in box-office revenue.

Consumer advocacy group Public Knowledge, which previously urged state attorneys general to investigate the merger, cheered the news of Monday's complaint.

"The states are right to ask the court to block this merger before the loss of competition, jobs, and creative output becomes much harder to undo,” John Bergmayer, the group's legal director, stated Monday.