US state attorneys general file lawsuit in effort to block Paramount merger

The coalition behind the lawsuit is led by the California attorney general, Rob Bonta, who has been a staunch critic of the merger since it was agreed to in February after a bidding war between David Ellison’s Paramount Skydance and Netflix.

The lawsuit was joined by the states of Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.

“Today, I am leading a coalition of states in challenging the proposed merger of Warner Bros and Paramount and asking the court to block the deal,” Bonta said in a statement. “The unlawful merger of these two entertainment behemoths would lead to higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately, audiences on every sofa and movie theater seat in the US.”

Bonta and his fellow state attorneys general are now asking a judge to stop the merger until the judicial process plays out. “In this country, no one is above the law,” he said. “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.”

The lawsuit was filed in US district court for the northern district of California.

The widely anticipated lawsuit comes weeks after the US Department of Justice signed off on the deal, clearing a major obstacle for the merger. While dozens of countries have also agreed to the deal, it still awaits approval from regulators in the UK and Europe. On 30 June, the UK culture secretary, Lisa Nandy, said she was “minded” to intervene and asked both the communications regulator, Ofcom, and the Competition and Markets Authority (CMA) to further investigate the deal, which would delay its timeline.

Paramount Skydance and Ellison have maintained that the merger will increase competition and preserve the Hollywood theatrical status quo.

“This deal is pro-competitive, resulting in a stronger company better positioned to compete against dominant technology platforms in an industry increasingly defined by intense competition for audiences, talent, technology and investment,” the company said in a statement after it received approval from the Trump administration.

The close ties between David Ellison, his father, the Oracle billionaire Larry Ellison, and members of the Trump administration have raised questions about whether the regulatory playing field was tilted toward the deal’s approval, despite the concerns of actors, journalists and many prominent politicians.

Paramount Skydance is keen to close the deal by 30 September, after which time the company has agreed to pay a “ticking fee” of an additional $0.25 per share each financial quarter until the deal closes, potentially adding hundreds of millions of dollars to the final purchase price.

Some deal opponents have grown frustrated that the long-rumored lawsuit had not materialized, particularly ahead of the justice department’s decision to approve it. But, in an interview with the Guardian last month, Senator Elizabeth Warren said she “wouldn’t draw a lot of inferences” from the delay, since the case required significant resources and coordination to decide “how they’re going to pool their efforts to go up against a giant like Ellison”.

More details soon…