TWELVE STATES SUE TO BLOCK PARAMOUNT'S $81 BILLION TAKEOVER OF WARNER BROS. DISCOVERY . (PHOTO).

 Twelve states sue to block Paramount's $81 billion takeover of Warner Bros. Discovery 

  

Twelve states filed a lawsuit Monday seeking to block Paramount’s proposed $81 billion acquisition of Warner Bros. Discovery, arguing the merger would reduce competition in Hollywood, drive up prices, limit consumer choice and result in fewer movies and television shows.

California Attorney General Rob Bonta, leading the coalition, said the merger would combine two of Hollywood’s five remaining legacy studios, placing HBO Max, Warner’s film and television library, CNN, CBS and Paramount+ under one corporate umbrella. The lawsuit argues the deal would also harm movie theaters and cable distributors by giving the combined company greater market power. The states are asking the companies to delay closing the transaction until the legal challenge is resolved and are prepared to seek a temporary restraining order if necessary.

Paramount rejected the lawsuit, calling it a misrepresentation of antitrust law and arguing the merger would create a stronger competitor to dominant streaming and technology companies. The company said it intends to vigorously defend the deal. Warner Bros. Discovery referred questions to Paramount.

Joining California in the lawsuit are Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.

The legal challenge comes after shareholders approved the transaction in April and federal regulators cleared the deal last month. Paramount and Warner had hoped to complete the merger during the third quarter, but the lawsuit could delay those plans.

Paramount has agreed to pay shareholders a quarterly fee if the deal is not completed by Sept. 30 and could also face a $7 billion regulatory termination fee if the transaction falls through. The company has secured approvals in several countries, including China, Canada and Australia, while reviews continue in the European Union and the United Kingdom.

Including debt, the proposed acquisition is valued at nearly $111 billion.

Paramount and Warner argue the merger would strengthen their position in the evolving entertainment industry while giving consumers access to a larger combined content library. Opponents, however, contend the merger would further consolidate an industry already dominated by a handful of major companies. The lawsuit claims the combined company would control nearly one-third of the theatrical film distribution market and the basic cable programming market.

New York Attorney General Letitia James said the merger would create a company with enormous influence over news and entertainment while putting jobs and businesses at risk. Labor groups, including the Writers Guild of America, have also opposed the deal, warning it could lead to fewer jobs, lower wages, less programming variety and higher costs for consumers.

Paramount countered that delaying the merger would hurt entertainment workers and reduce its ability to compete with larger streaming rivals such as Netflix.

The case also highlights political divisions surrounding the transaction. Democratic attorneys general criticized the Justice Department's decision not to challenge the merger, questioning whether political considerations influenced the review. The Justice Department has maintained that its decision was based solely on competition law and said the merger would benefit consumers and workers by increasing competition in the media industry.

The proposed merger has also drawn attention because it would place CNN under Paramount ownership, adding one of the nation's largest cable news networks to the company's expanding media portfolio.