Washington, D.C. — Today, 12 state attorneys general sued to block Paramount-Skydance’s $110 billion acquisition of Warner Brothers-Discovery. In response, American Economic Liberties Project released the following statement applauding their decision and encouraging them to ensure this anticompetitive and illegal merger never sees the light of day:

“I spent the last month meeting with the workers and business owners who’d be hit with this deal,” said Alvaro Bedoya, Senior Advisor at American Economic Liberties Project, who just completed town halls on the merger in Los Angeles, New York, and Atlanta. “The rich guys who run Paramount can say what they want, but the people who actually work for them know that this will kill jobs and screw over the small businesses that are the lifeblood of this industry. I hope the states win and win fast, because these people need it.”

“This illegal merger would mean layoffs for artists and workers, higher prices for consumers, and the death of Hollywood,” said Matt Stoller, Research Director at American Economic Liberties Project. “State enforcers have done the right thing in seeking to block it. It is time to stop oligarchs from strip-mining our culture and selling America off for parts. Blocking this mega-merger is the first step in doing so.”

California Attorney General Rob Bonta leads the attorneys general of Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, and Washington in this suit, which alleges that the merger violates Section 7 of the Clayton Act, a federal antitrust law that bans mergers that threaten competition. 

The lawsuit specifically argues that the merger would reduce competition in two markets: theatrical film distribution (particularly for anticipated blockbuster releases known as “tentpole films”) and basic cable television channel licensing. According to Bonta’s office, the combined company would control nearly one-third of theatrical motion pictures and nearly one-third of basic cable programming. 

“The two studios, combined, have never put out more than 24 theatrical releases per year. It fluctuates between 15 and 24. Ellison is saying he can do more, a lot more, with a lot less. He’s taking on $79B in debt, which he needs to service, and he’s going to cut $6 billion in costs. So he’s got astronomical debt payments, he’ll be laying thousands of people off, and somehow he’s going to put out more tent-pole theatrical releases? It doesn’t make sense,” Bedoya added on the flaws of the Ellison family’s math, and the way tentpole films would be impacted by this merger. 

The states’ lawsuit creates immediate financial pressure on the merger. Paramount has agreed to pay Warner Bro. Discovery shareholders $650 million every quarter the deal doesn’t close, starting in October. 

BACKGROUND

States’ decision to prosecute this case follows AELP’s two-week Main Street vs. The Merger tour, a series of town halls across Los Angeles, New York City, and Atlanta bringing together entertainment workers, small business owners, elected officials, and antimonopoly advocates to speak about how the Paramount-Warner Bros. mega-merger would affect people’s lives and livelihoods. 

Attendees underscored the real-world consequences of the deal and past media mergers, sharing firsthand accounts of how further consolidation would harm workers, small businesses, and local communities:

• With even less competition, studios further favor derivative, recycled projects over unique, original ones: “You will laugh less,” a writer shared. “You’re watching Friends and The Office over and over again, because those classic meat-and-potato shows don’t live in a landscape without competition.”
• The merger will lead to higher ticket and streaming prices: “They’ve gotten mergers like [past media deals] across by always saying they reduce prices for consumers,” comedian Adam Conover shared. “Does anybody feel like you’re paying less for your media than you were five or ten years ago? Everybody feels like they’re paying more.”
• Consolidation means less movies and shows overall getting made: “I broke into this business about ten years ago,” a WGA member told us. “As a young writer, I had a plethora of opportunities to work in writers rooms and television and also able to sell shows very early in our career… cut to just last year, I had a project with CBS studios and we could only take it to three places.”
• The deal will lead to more layoffs: “A decade ago the conversation would be, ‘what are you working on?’ Now, it’s ‘are you working?,’”one attendee shared. “Mergers lead to fewer jobs, which leads to people struggling to put food on the table for their family.”
• Media concentration risks censorship and politicization: “When the same billionaire family controls the studio, the news network, and the streaming pipe, curation stops being a public good and becomes a private gate with political hinges,” a producer told us.  
• Small businesses will get burned by more monopolistic behavior: “It’s because of mergers and big business our challenges happen,” a local temp agency owner told us. “They require us to use background checks with their owned and operated… company, with charges as high as three times the amount of our current background checks. And we’re required to use their accounts payable company. The annual fee is $6,000.”
• The merger will especially hit minority communities: “When Paramount and Warner Brothers tell you that they won’t cut projects and will maintain fairness and neutrality, they are lying.” a writer shared. “They will cut projects wholesale, and they will use that chance to further censor voices from marginalized communities.”
• The deal will hollow out documentary-making: “Consolidation of two of America’s audio and visual broadcast libraries,” a documentary producer told us. “The proposed merger puts CNN and CBS two of the major news archives under one ownership… I anticipate difficulty in accessing research, higher licensing fees, and censorship.” 

The Main Street vs. the Merger tour is only the most recent in a long line of action AELP has taken against Paramount’s illegal bid to acquire Warner Bros. 

In May, AELP Director of Research Matt Stoller co-authored an op-ed with actor Mark Ruffalo in The New York Times outlining the case against the merger and the labor, creative, and press-freedom stakes of letting it go through. In addition, the Block the Merger Coalition, which AELP is a leading member of, has collected over 5,000 film and television professional signatures on its open letter opposing the deal, including Robert De Niro, Noah Wyle, Kristen Stewart, and more.

The seismic impact of the Paramount-Warner Bros. merger should not be understated. It would create one of the largest media companies in history, moving CBS, CNN, HBO, Nickelodeon, Warner Bros. Pictures, Paramount Pictures, and other properties under one roof — in a deal that would burden the combined company with $79 billion in debt, including much owed to totalitarian Gulf states.

Prior Hollywood mergers have been notable failures, leading to reduced profits, multiple rounds of layoffs, and less output. For example, after Disney purchased Fox in 2019, movie output for the combined firm fell by almost 50%. This reduced output hasn’t just hit jobs in Hollywood, but also at theaters across the country that are increasingly having trouble sourcing enough product to remain viable. If this illegal deal is allowed to go through, Paramount has already pledged ‘synergies’ of $6 billion, which likely means laying off roughly 20 to 40% of the combined company workforce. For context, following the Skydance-Paramount acquisition, the combined company shed 10% of its workforce, cut $2 billion in costs, and cancelled a number of programs. 

Learn more about our Main Street vs. the Merger event series here.

Read our FAQ on the Paramount-Warner Bros. merger here.

Learn more about Economic Liberties here.