Paramount Skydance on Thursday began laying out legal arguments against an antitrust lawsuit brought by more than a dozen states, calling it “one of the weakest merger lawsuits in modern antitrust history.”
Lawyers for Paramount have challenged states’ requests for temporary restraining orders that would halt the company’s $111 billion merger with Warner Bros. Discovery. In the filing, Paramount argued that the states’ claims that the merger would harm competition were inconsistent with the “real world economics” of the film industry.
“Plaintiffs’ concentration numbers are irrelevant because the barriers to expansion by existing competitors, including Universal, Disney, Amazon MGM, Sony, Lionsgate, A24, and NEON, are low, ensuring that competition will remain strong,” Paramount’s lawyers wrote. “Real-world economics of movies”
Economic incentives from distributions and mergers show that trading increases, but they do not.
The production of theatrical films will decrease, but this will not have a negative impact on the price conditions of theaters. ”
A coalition of 12 states led by California Attorney General Rob Bonta filed a lawsuit Monday alleging that the Warner Bros. merger would create illegal market concentration and harm theaters and cable distribution companies. The complaint alleges that the combined entity will control 30% of the blockbuster film distribution market, with four companies including Disney, Universal and Sony controlling 93% of the market.
In its opposition, Paramount cited another company, Amazon MGM Studios, and the huge success of its “Project Hail Mary” this year. Paramount argued that if Paramount reduced production, other distributors such as Amazon MGM, A24 and Lionsgate could increase production levels, eroding Paramount’s pricing power with theater chains.
Paramount has previously expressed opposition to the lawsuit, but this is the first time it has detailed its case in court.
The states also argue that Paramount and Warner Bros. Discovery are two of the three largest owners of basic cable channels, giving the combined entity undue influence over cable and satellite TV providers. In response, Paramount argued that the Paramount and WBD cable lineups were complementary, not substitutes, in the market, and that cable providers would continue to want access to all channels.
Paramount also claimed that cord cutting was eroding the influence of all cable channel owners.
“In this environment, the bargaining position of every programmer is diminishing as the underlying assets (pay-TV subscribers) on which affiliate fees are calculated are shrinking year by year,” the company argued.
A hearing on the motion for a preliminary injunction is scheduled for 10 a.m. Friday before Judge Araceli Martinez Holguin.
