California and eleven other states filed a lawsuit to block the $110 billion merger of Warner Bros and Paramount, arguing the largest media consolidation in Hollywood history would concentrate excessive market power in four conglomerates and raise costs for theaters, cable distributors and viewers. The complaint, led by Attorney General Rob Bonta, claims the combined studio would control more than a quarter of major film releases, and that alongside Disney, Universal and Sony, just four companies would command 86 percent of that market.
The states estimate the new entity would capture nearly a third of the U.S. theatrical motion picture market and basic cable programming. The legal challenge focuses on three product markets, major cinema releases, blockbuster franchises and basic cable channels, where the loss of a direct competitor would strip bargaining power from exhibitors and networks that currently can walk away from one studio and deal with the rival.
Paramount called the lawsuit "fundamentally flawed" and "wrong," saying it would vigorously defend the transaction. The company warned that delaying the deal would deepen job losses in a sector already shedding tens of thousands of positions as streaming upends traditional economics. Paramount has been based in California for more than a century, but U.S. news website Semafor reported that controlling shareholder David Ellison, chief executive of Paramount Skydance and son of tech billionaire Larry Ellison, has been urged by advisers to move operations out of the state.
Bonta characterized the relocation talk as an explicit threat to blackmail regulators into allowing an illegal deal. "It didn't work. It won't work. It doesn't work," he told the BBC World Service. Paramount declined to comment on whether it was considering a move or to respond to Bonta's remarks.
The U.S. Department of Justice approved the merger in June, but the coalition of attorneys general has demanded the companies halt the transaction pending judicial review and threatened to seek a temporary restraining order if they do not comply. Warner Bros has been contacted for comment.