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Attorney General Jennifer Davenport today joined a coalition of 12 attorneys general in filing a lawsuit challenging the $110 billion acquisition of Warner Bros. Discovery, Inc. (Warner Bros.) by Paramount Skydance Corporation (Paramount).

The proposed merger would combine two of Hollywood’s five major film distributors and two of the five major basic cable companies, extinguishing competition between Paramount and Warner Bros. and inflicting substantial harm on movie theaters, basic cable distributors, and, ultimately, consumers nationwide.

In the United States alone, if allowed to merge, the combined titan would control roughly one-third of theatrical motion pictures and nearly one-third of basic cable programming. The coalition has asked Warner Bros. and Paramount not to close the merger until after the judicial process concludes – and if the companies do not agree, the coalition will be filing an application for a temporary restraining order to prevent the merger from closing while the case proceeds in court.

"New Jersey is the birthplace of the American film industry, and the state is now a burgeoning hub for film and television production. Given our state’s leadership in the film and television industry, we must protect our residents when corporate media monopolies threaten to upend the industry by raising prices and reducing content choices,” said Attorney General Jennifer Davenport. “The proposed merger between Paramount and Warner Bros. Discovery will hurt our state’s residents, plain and simple. We will always stand up against corporate monopolists that seek to exploit hardworking New Jerseyans by driving up prices and turning a massive profit at their expense.”

For more than a century, Warner Bros. and Paramount have stood as independent sources of creativity and competition in the film and television industry. The lawsuit, filed in the U.S. District for the Northen District of California, alleges that the merger violates Section 7 of the Clayton Act, which holds that mergers that may substantially lessen competition or tend to create a monopoly are illegal. The attorneys general allege that if Warner Bros. and Paramount are allowed to merge the 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 combine for an around 27% share of the market. After the merger, only three distributors will control 75% of these films, and only four distributors (Defendants, Disney, Universal, and Sony) will control 86% of them.

·    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, Defendants will control more than 30% of these films, and four distributors (Defendants, Disney, Universal, and Sony) will 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.

Currently, Paramount and Warner Bros. compete fiercely to create and distribute new, different, and innovative 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 rely on 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. The availability of alternatives is essential in these negotiations. For example, if Paramount insists on onerous financial terms, the distributor can gain leverage by turning to Warner Bros. — and vice versa. Distributors rely on competition between entertainment companies 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. will end this competition between the two merging companies, threatening viewers 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 Davenport joins the attorneys general of California, Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Mexico, New York, Oregon, and Washington.

In New Jersey, the Attorney General is represented in the matter by Deputy Attorney General Anasemoun W. Robinson, under the supervision of Assistant Section Chief Laura E. Sedlak and Assistant Attorney General Brian McDonough within the Division of Law’s Affirmative Civil Enforcement Practice Group.