Consumers are Suing to Block the Paramount/Warner Bros. Discovery Merger
The stockholders have voted, the federal government will provide little resistance, and rumors are European regulators won’t ask for any changes to the deal. But, there’s still some resistance to the $110 billion merger between Paramount and Warner Bros. Discovery.
A group of Paramount+ subscribers have filed a federal antitrust lawsuit in an attempt to stop the deal. They claim that the deal will harm competition, raise prices, and reduce quality.
The move also attempts to rollback Skydance’s takeover Paramount stating that and the Warner Bros. Discovery is an attempt at consolidation and eliminating rivals.
From the lawsuit:
Paramount’s ability and incentive to raise prices, reduce output, narrow slates, reduce quality and worsen consumer-facing terms, including through control of distribution, exclusivity, windowing and licensing.
If Paramount’s proposed acquisition of Warner Bros. Discovery is consummated, the combined firm would have increased ability and incentive to reduce theatrical film output and narrow release slates, substantially lessening competition by leaving moviegoers with fewer theatrical titles, less genre and budget variety, and fewer meaningful alternatives at local theaters.
Skydance’s nontrivial acquisition of Paramount Global and the proposed nontrivial acquisition of Warner Bros. Discovery reflect the same strategy of refusing to compete by building better products, investing, innovating, or winning customers through rivalry on the merits, but instead pursuing scale through consolidation that eliminates independent rivals and weakens the competitive constraints that protect consumers.
The lawsuit focuses on Section 7 of the Clayton Antitrust Act. That bars mergers that reduces competition and the number of “top companies” in a marketplace. With this deal, Paramount would control about 24% of the theatrical distribution market.
The post-merger top four studios would be Paramount/Warner Bros. at approximately 23.6%, Disney at approximately 21.4%, Universal at approximately 20.2%, and Sony/Columbia at approximately 11.1%, for a combined top-four share of approximately 76.3%. The proposed transaction, therefore, would not merely combine two studios; it would increase top-four concentration by approximately 10.2 percentage points and eliminate Paramount as an independent studio competitor.
That percentage of the market has caused the trade organization Cinema United to oppose the merger as well. Over 4,000 individuals have no signed a letter opposing the merger.
The lawsuit also focuses on the consolidation of the news media. In the takeover of Paramount by Skydance, they gained control of CBS News. The Ellisons are also an investor in the US controlled TikTok, a major source of news. The lawsuit focuses on the consolidation of news and that the new company would control CNN if it acquires Warner Bros. Discovery. It too would “weaken competitive constraints that protect editorial rivalry, investigative resources, and viewpoint diversity.”
California Attorney General Rob Bonta is reviewing the merger and its expected there will be legal action from state attorneys general opposing the merger.
