The bidding war for Warner Bros. Discovery may have ended, but the outcome is still not yet certain for Paramount’s “winning” $111 billion offer. This is because state regulators from California, where both Paramount and Warner Bros are based, have begun to scrutinize the potential impact that the merger would have on the entertainment industry.
Paramount CEO David Ellison has stated publicly that he expects the deal to “fly through” regulatory review and close within six months. At the same time, California Attorney General Rob Bonta posted on X that he was “in communication with other attorneys general” about the deal and cautions that, “It’s not a done deal.” Antitrust experts say state reviews are the biggest remaining hurdle for Paramount, as a joint lawsuit in federal court could compel an antitrust review.
A lawsuit from the states could have legal merit, based on similar arguments used to block a 2022 merger between publishing giants Penguin Random House and Simon & Schuster. In that case, a federal judge blocked the merger, citing potential harm to authors from reducing the number of major book publishers to four. Coincidentally, the Paramount-Warner Bros. merger would also result in there being only four remaining studios from Hollywood’s traditional big six. Disney, Universal, Sony, and the combined Paramount and Warner Bros studio would remain, with Warner Bros. becoming part of Paramount, Fox having been folded into Disney in 2019.
This could create increased stress for the motion picture exhibition industry, with theatres having fewer sources for the new movies they rely on, and decreased negotiating power. Hollywood’s creative community is also alarmed, fearing that 1000’s of studio and production jobs would be eliminated in the inevitable drive to cut costs. A number of key industry trade groups are coming out in opposition to the merger, including the Writers Guild of America and the Cinema United association of movie theatre owners.
