State AGs Sue to Block Paramount Skydance–Warner Bros. Discovery Merger

Key facts

• Twelve state attorneys general filed a federal lawsuit on July 13 in the Northern District of California to block the Paramount Skydance–Warner Bros. Discovery merger.
• The lawsuit argues the merger would lead to higher prices, lower quality, and less content for film and television.
• David Ellison, chairman of Paramount Skydance, is the son of Oracle founder Larry Ellison, a close ally of Donald Trump.
• The merger would combine Paramount+ and HBO Max, and bring CBS News under the same roof as CNN.
• Bari Weiss, head of CBS News, may oversee CNN, according to Axios.
• Larry Ellison has told Trump that CNN will undergo an 'overhaul' under his son's control, per the Wall Street Journal.
• The DOJ and FTC have historically been the most powerful antitrust regulators, but under the second Trump administration, states have taken the lead.
• Alvaro Bedoya, former FTC commissioner, says the deal is illegal, citing 'red flag after red flag.'
• John Newman, law professor at the University of Memphis, calls it a 'very traditional antitrust case' that states can win.
• The merger is a horizontal merger, historically easier to block than vertical ones.
• Paramount Skydance argues the merger will boost competition against Netflix and Amazon.
• The states have asked Paramount Skydance to pause the merger; if refused, they will seek a temporary restraining order.
• A trial could begin in six months to a year, and California's Northern District is known as a slow court.
• Newman notes the unusual nature: 'It's the son of one of the richest men on earth buying himself a position of influence and power.'
• The Penguin Random House–Simon & Schuster merger was blocked in 2022 after Stephen King testified.
• Paramount Skydance called the challenge 'fundamentally flawed' and said delaying would harm entertainment workers.
• UK and EU regulators are reviewing, but Newman doubts they will be a roadblock; the EU may approve if Paramount abandons a joint venture with Universal Pictures.
• Matt Stoller of the American Economic Liberties Project says the deal's impact on journalism is almost inadvertent: 'He'll incidentally destroy democracy.'
• Paramount has hired antitrust 'rock star' Jeffrey Kessler, who downplays news concerns.
• If the deal proceeds, the new entity would carry nearly $80 billion in debt; Paramount Skydance claims $6 billion in synergies, but Graham Smith calls that 'crazy.'