Twelve states filed a lawsuit on July 13 to block Paramount Skydance Corporation’s $110 billion acquisition of Warner Bros. Discovery, with California Attorney General Rob Bonta leading the coalition, according to the California Department of Justice.
Filed in the U.S. District Court for the Northern District of California, the complaint argues the merger violates Section 7 of the Clayton Act, the federal statute prohibiting mergers likely to substantially reduce market competition.
According to Axios’ review of the complaint, the states’ antitrust case focuses on three separate markets. Following the merger, three companies would control 75% of the wide-release theatrical film market, while four companies — the merged firm, Disney, Universal and Sony — would control 86%.
Among the highest-grossing theatrical releases specifically, the combined company alone would account for more than 30% of the market, while those same four companies would collectively control more than 90%. In the cable television sector, Warner Bros. Discovery currently ranks second and Paramount ranks third in licensing basic channels. Together, the companies hold a 27% market share.
“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 U.S.,” Bonta said in the press release.
Separately, MACRO Lab, a coalition of nearly two dozen media researchers organized by UC San Diego communication professors Andrew deWaard and Shawna Kidman, ran its own numbers and concluded three of the four markets it studied would qualify as presumptively illegal under federal merger guidelines.
The group’s analysis estimated the merged company would control 38.9% of the pay TV programming market, increasing the Herfindahl-Hirschman Index (HHI) by 595 points to total 2,429. Under federal merger guidelines, increases exceeding 200 points in highly concentrated markets typically receive heightened antitrust scrutiny. Combined television production share, at 31.1%, crossed the same line.
Speaking to KQED Forum this week, Bonta offered a glimpse of what resolving the case might involve, saying he would be open to structural remedies, arrangements would keep certain pieces, such as a bundle of cable channels, a streaming platform, a news outlet or a film studio, legally separate from the newly combined company.
Employment is another focus of the MACRO Lab research. The report notes Warner Bros. Discovery already cut 10% of its staff in 2025 following its earlier merger with Discovery, while Paramount separately laid off approximately 2,000 employees in the same year. Citing industry analyst projections, the report estimates the proposed merger could eliminate as many as 6,000 additional jobs across film, television and corporate operations.
Job losses are not the only consequences. Even though the states aren’t arguing the case on First Amendment grounds, Susan Seager, an adjunct professor of law at UC Irvine who directs UCI Law’s Press Freedom Project, told New University by email that she sees real danger for editorial independence in the deal, calling the merger a serious setback for the country’s tradition of a free press and the free exchange of ideas.
“We already know that the Ellison family’s ownership of CBS has led to censored news reports,” Seager said. “Under the Ellisons, we can expect CNN would soon bow down to the president as well, censoring news that dares to criticize him and his administration.”
David Ellison and his father, Larry Ellison, a major donor to President Donald Trump, took over CBS’s parent company Paramount in August 2025 only months after Paramount paid Trump $16 million to settle a lawsuit over a “60 Minutes” interview edit, according to NPR. Since then, the new CBS Chief Bari Weiss has faced accusations of political interference, including pulling a “60 Minutes” investigation on abuses at an El Salvador detention center.
According to Seager, the First Amendment simply doesn’t reach private companies like Paramount, since it restrains government action rather than corporate decision — which is why states built their case on antitrust law instead. The complaint describes the resulting company as a “media behemoth” that would leave the public with “less original programming, fewer series, and access to less variety and fewer viewpoints, even as they pay higher fees,” as stated in the lawsuit.
Seager also raised an argument she hasn’t seen in any filing so far: that federal regulators approving the merger could infringe on the public’s right to receive information. The Supreme Court recognized this in its 1982 decision in Island Trees School District v. Pico, who recognized that “the right to receive ideas is a necessary predicate to the recipient’s meaningful exercise of his own rights of speech, press and political freedom.”
Cassie Zhang, a PhD candidate in UC Irvine’s Department of Economics, researches how mergers reshape market structure and consumer welfare. She explained how concentration statistics, such as the complaint’s estimates that four distributors would control 86% to 90% of several film markets, are an important starting point but do not determine the outcome of an antitrust case.
Drawing on her research on the Alaska Airlines-Hawaiian Airlines merger, she explained, “A merger could leave a posted subscription price unchanged while still reducing quality, choice or output.”
Because Paramount and Warner Bros. Discovery compete in film distribution, cable licensing and streaming, Zhang said the merged company could use market power in one area to strengthen its position in another.
“After a merger, the combined firm may have an incentive to withhold attractive content from rivals, raise licensing fees, offer less favorable release windows or bundle rights in ways that disadvantage smaller distributors,” Zhang said. This kind of leverage doesn’t require a single price to change for consumers to still feel the effect.
“Antitrust is not concerned with size for its own sake. It is concerned with preserving meaningful alternatives,” Zhang said. “Concentration thresholds matter because once competition and independent decision-making disappear through a merger, they are very hard to recreate.”
The ruling on the states’ bid for a temporary restraining order is pending, even as Paramount continues working toward closing the deal ahead of its Sept. 30 deadline.
Aadya Mishra is a News Intern for the summer 2026 quarter. She can be reached at aadyam2@uci.edu.
Edited by Anika Denny and Geneses Navarro.
