A Dozen States Sue To Block Paramount’s Shitty, Unpopular Merger

from the do-not-pass-go,-do-not-collect-$200 dept

A dozen states have filed an antitrust lawsuit to block Paramount/CBS’ $111 billion merger with Warner Brothers. The states argue the deal will undermine market competition, cause untold layoffs, result in higher prices and lower quality for consumers, and significantly harm a Hollywood entertainment industry that still hasn’t fully recovered from Covid, the streaming revolution, or previous shitty mergers.

The state lawsuit, led by California AG Rob Bonta and filed in the U.S. District for the Northern District of California, alleges that the merger violates Section 7 of the Clayton Act, which holds that mergers that lessen competition or endeavor to ultimately create monopoly are illegal.

Larry Ellison’s efforts to gift his nepobaby son with two Hollywood studios in a year might be fun for David and other aspiring if unqualified moguls, but it’s likely to result in more problems than ever given the deal’s significant debt load and the steady hints of incompetence among Ellisons’ chosen leadership.

From the California AG’s announcement:

“Consolidation here not only leads to higher prices — it also leads to fewer opportunities for important stories to come to life, and fewer ways for audiences to encounter stories, ideas, and perspectives beyond their own experiences. In this country, no one is above the law. With this lawsuit, California and our sister states are fighting for free and fair markets, not rigged markets. America has no kings in government or our economy.”

California’s AG notes the deal combines two of the nation’s five major film distributors, leaving four major film distributors controlling over 85 percent of all wide-release theatrical films in the United States. The deal also combines two of the five major owners of basic cable channels (three of which are technically Disney), leaving just two companies in control of 59 percent of all basic cable in the United States.

Other states that signed off on the lawsuit include Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington. You’ll notice a broad lack of Republican AGs, despite a lot of pretense last election season that the GOP really cared a lot about antitrust now. Apparently a top Trump donor clumsily trying to dominate American media (with Saudi, Qatari and Chinese help) doesn’t qualify.

We’ve discussed at great length how these sorts of major media deals almost uniformly result in mass layoffs and price hikes in order to pay off the massive new debt load. Every deal involving Warner Brothers in particular, which now goes back a quarter century to AOL, have always resulted in mass layoffs, higher prices, lower-quality, corner cutting, and a lot of shuttered creative projects.

Such deals generally only benefit the extraction class, who, every time they’re out of fresh ideas, look to mindless consolidation to shuffle the deck, obtain tax breaks, and nab a brief stock boost. Execs then inevitably cannibalize brand quality, cash out (see: AT&T), then float off to the next effort with “savvy dealmaker” emblazoned across their resumes, outsized executive compensation in hand.

The state lawsuit doesn’t really touch on the foreign influence peddling concerns created by the deal’s Saudi and Chinese funding. That would normally be a job for the FCC, were we to have one that functioned in the public interest. The state also lacks any authority to challenge Larry Ellison’s efforts to dominate what’s left of U.S. corporate media, supplanting already shaky journalism with lazy right wing agitprop.

Paramount issued a statement insisting that antitrust law somehow doesn’t apply to it, while arguing any delay in the deal would harm consumers:

“The lawsuit filed by the state attorneys general, in the most generous light, reflects a fundamentally flawed application of the antitrust laws and is wrong on both the facts and the law. Delaying this transaction will only harm entertainment workers who have already suffered over recent years as technology has disrupted their livelihood and cost California tens of thousands of entertainment jobs.”

As hints of a looming state lawsuit loomed, Paramount executives seemed to get more and more desperate, jumping between falsely claiming opposition to the deal was “antisemitic,” to empty threats leaked to news outlets this week that the company could leave California if state regulators interfered.

A delay caused by the new state lawsuit isn’t likely to hurt consumers or workers. It is, however, potentially harmful for a very debt-heavy acquisition backed by Ellison, who is extremely over-leveraged on the AI hype bubble. Should the AI bubble pop during regulatory review, Ellison could be looking at a far less forgiving financial reality that makes his aggressive media ambitions less tenable.

Filed Under: antitrust, competition, consolidation, consumers, larry ellison, layoffs, media, rob bonta

Companies: paramount, warner bros., warner bros. discovery