Attorney General Dan Rayfield and a coalition of 12 attorneys general today filed a lawsuit challenging the $110 billion acquisition of Warner Bros. Discovery, Inc. (Warner Bros.) by Paramount Skydance Corporation (Paramount).
“If this massive corporate merger is allowed to go through, Oregonians will pay the price – through higher bills, fewer jobs, less choice at the box office, and fewer editorial voices,” said Attorney General Rayfield. “Despite the federal regulators rubber-stamping this bad deal, we’re stepping up to protect families, small businesses, and Oregon’s film industry.”
The proposed merger would combine two of Hollywood’s five major film distributors and two of the five major basic cable companies, eliminating competition between Paramount and Warner Bros. and inflicting substantial harm on movie theaters, basic cable distributors and, ultimately, audiences in Oregon and nationwide.
If allowed to merge, the combined mega-corporation would control nearly one-third of theatrical motion pictures and nearly one-third of basic cable programming in the U.S. The coalition of states is prepared to file a temporary restraining order if Warner Bros. and Paramount don’t pause the deal until after the judicial process concludes.
Today’s filing follows weeks of Oregon’s own investigation into the merger. Last week, Attorney General Rayfield asked a Multnomah County judge to force Paramount to turn over records the state had been requesting since June – including documents tied to the company’s lobbying of the White House and U.S. Department of Justice, an effort Paramount internally called “Project Warrior.” Oregon’s investigation, and the questions it raised about how the merger secured federal approval, are now part of this broader multistate lawsuit.
“Paramount has already shown that they think they’re above the law by refusing to comply with Oregon’s investigation,” adds AG Rayfield. “This litigation is the next step to protect Oregonians before irreparable harm is done.”
For more than a century, Warner Bros. and Paramount have led the film and television industry as independent sources of creativity and competition. The lawsuit, filed in U.S. District for the Northern District of California, alleges that the merger violates Section 7 of the Clayton Act, which prohibits mergers that may substantially lessen competition or tend to create a monopoly. The attorneys general allege that the Warner Bros.-Paramount merger would lessen competition in the areas of:
- Wide Release Theatrical Film Distribution, where Warner Bros. and Paramount are two of the five major film distributors and would control around 27% of the market. After the merger, only three distributors would control 75% of these films.
- Anticipated Top-Grossing Theatrical Film Distribution, a submarket of theatrical film distribution focused on anticipated blockbuster films with wide audiences and large production budgets. After the merger, Warner Bros.-Paramount would control more than 30% of these films, and four distributors would control more than 90% of them.
- Licensing Basic Cable Television Channels, or the market for distributing basic cable channels to cable and satellite providers. Warner Bros. is the second largest and Paramount is the third largest in this market, and they would combine for a 27% share.
Further Background
Currently, Paramount and Warner Bros. compete to create and distribute film and television content to American viewers. To promote their films, they negotiate with thousands of movie theaters across the country and bargain with those theaters to secure the most coveted screens and calendar slots. Movie theaters in Oregon and across the country benefit from competition between Paramount and Warner Bros. to incentivize creativity and secure competitive prices and terms for themselves and for audiences.
Paramount and Warner Bros. also compete to market their basic cable channels. To acquire the rights to distribute that content to subscribers, distributors negotiate with Paramount, Warner Bros., and other cable channel owners. This competition is critical for distributors and for viewers. For example, if Paramount insists on bad financial terms, a distributor can gain leverage by turning to Warner Bros. — and vice versa. Distributors rely on this competition to secure low prices for themselves and for their subscribers, and to encourage programmers to invest in new and exciting content for television.
Paramount’s proposed acquisition of Warner Bros. would end this competition, threatening Oregonians with higher prices, the decline of theatrical exhibition of films, and a reduction in the variety, quality, and amount of content distributed.
In filing today’s lawsuit Attorney General Rayfield joins the attorneys general of California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, and Washington.