A group of 12 Democratic state attorneys general is suing to block Paramount Skydance‘s merger with Warner Bros. Discovery — arguing the transaction violates antitrust law by giving the combined company undue power in three markets: wide-release theatrical distribution, tentpole movies and basic cable TV.
Paramount says the suit “distorts settled antitrust law” and that the company will “vigorously” fight the challenge. Late Monday, the states filed a motion seeking a temporary restraining order that would halt the proposed Paramount-WBD merger pending the outcome of their antitrust litigation. (The court set a hearing on the TRO motion for Friday, July 17 at 10 a.m.) Separately, on Tuesday the WGA sued to block Paramount’s deal for Warner Bros., arguing it would reduce pay for writers and limit job opportunities.
So do the state AGs have a case — and could it result in Paramount having to make certain guarantees or concessions to get the Warner Bros. deal done?
The lawsuit alleges that Paramount-WBD’s scale of monopolization would be around (or just under) 30% for each of the three markets, which is the bare-minimum threshold historically needed to win an argument that such consolidation will harm market participants.
On its face, the state AGs’ case is a strong one, said Sam Weinstein, professor at the Cardozo School of Law and former DOJ antitrust attorney. “It’s not a frivolous complaint. If they can support what they say, it’s a compelling case,” he said, adding as a caveat that it remains to be seen what evidence the states will present to support their claims.
Eric Talley, a professor at Columbia Law School, said on “Daily Variety” podcast that the case is “facially pretty plausible, and it fits very comfortably into a lot of similar sorts of complaints that have been filed both in media industries and others.”
Listen to the full “Daily Variety” podcast episode here
“So this is a roadblock that I think Paramount Skydance and David Ellison and Warner Bros. Discovery are going to have to contend with,” Talley said. “And it may well play a significant sort of delaying role, if not a kneecapping role, on this deal.”
State attorneys general, including California’s Rob Bonta, also sued to block Nexstar’s acquisition of TV station group rival Tegna — and this spring, they won a court injunction halting the companies from continuing with their merger integration. “It seems to me over the last couple of years, the memo has gotten lost in the file that state attorneys general have very much the same ability to challenge a merger under the Clayton Act as does the federal government,” Talley said.
Historically, it’s unusual for the states to take the lead on antitrust enforcement actions. Typically, you would see a joint state-federal case with the Justice Department leading the way, Weinstein noted. However, after the Trump administration’s DOJ cleared the Paramount-Warner Bros. deal without any conditions — reportedly over the objections of career antitrust lawyers at the department — “the states felt like they had to act on their own,” Weinstein said.
Talley said his guess is that the AGs will be successful in getting a court, at least temporarily, to stop the Paramount-WBD transaction from closing “until there’s a little bit more work that’s done in the discovery part of this case.” He added that should settlement negotiations ensue, those could take any number of forms with possibly some concessions from Paramount.
But some legal experts say it’s unclear that the states will prevail.
“I’m not 100% sure this will be successful,” Syracuse University law professor Shubha Ghosh told Variety. Generally, he said, courts have been deferential in allowing mergers across the board to proceed. In addition, a judge might find that the AGs’ case too narrowly defines the markets in question. A court’s analysis might consider factors like streaming and AI, and how they play into the competitive dynamics in the industry.
Distribution of entertainment content “isn’t limited to just movie theaters or basic cable,” Ghosh said, it’s also on YouTube and other streaming platforms. “The courts could push back and say there’s still competition from that.”
Others think the states have an uphill battle. “Due to the nature of the movie business, the case is built on flexible — and highly debatable — metrics of market share and market power when it comes to distribution,” according to Reuben Miller, head of antitrust at M&A news and data company Dealreporter. He said the lawsuit also does little to assert that Paramount’s cable TV channels, which include MTV, Nick and Comedy Central, constitute “must-have” programming.
The state AGs’ case doesn’t focus on the highly competitive streaming market, where Paramount-WBD together would not have dominant share. Paramount has noted that its Paramount+ subscription streamer together with WBD’s HBO Max would have 10.8% U.S. market share (as of December 2025), far behind Netflix (32.5%) and trailing Disney (16.7%) and Amazon (15.3%).
A growing number of streaming platforms compete with an array of other entertainment options, said Jennifer Huddleston, a senior fellow in technology policy at think-tank Cato Institute. That competition includes not only traditional cable television and movie theaters but also user-generated content like short-form videos on TikTok and Instagram Reels or longer videos on YouTube, Huddleston said: “Any challenge should be focused on the impact on consumer welfare and not on favoring certain competitors or less successful elements of the market.”
The success of the case will hinge on whether the judge hearing it is persuaded by the arguments that Paramount-Warner Bros. will have anticompetitive control in the identified markets. It has been assigned to Judge Araceli Martínez-Olguín of the U.S. District Court for the Northern District of California, a Biden appointee who formerly worked at the ACLU and the National Immigration Law Center. Martínez-Olguín is the judge hearing a lawsuit brought by Paramount+ subscribers who claim they face increased prices and reduced viewing options as a result of the Warner Bros. merger.
Weinstein cautioned against reading too much in the case being assigned to a judge who may be perceived to have political leanings. “All things being equal, judges in antitrust cases tend to be more apolitical than in, say, civil rights cases,” he said.
Columbia’s Talley noted that Paramount has committed to paying a “ticking fee” of 25 cents per share to shareholders for every quarter the deal isn’t completed after Sept. 30 — equivalent to approximately $650 million cash value each quarter. “September occurs before November, which is when the elections are taking place,” he said on the “Daily Variety” podcast. “So I think it’s quite likely that that we’re going to see a little bit of a delay game going on at least until the November elections.”
To some extent, the states’ antitrust case “is a proxy war for larger questions that are sort of bubbling up,” Talley said. One question that’s “very, very hard to ignore right now” is, How does the federal government interact with and control the media?
Paramount and CBS “have been moving in a particular direction,” he said. “Many of the assets of Warner Brothers discovery, notably CNN, has not been moving in that same direction. And so I think in some level, whether you distill this as an antitrust battle or almost like a battle for the cultural hearts and minds of the American and state public, this almost certainly is going to be playing at least a subtextual role in the antitrust case as well.”