A group of 12 Democratic state attorneys general is suing to block Paramount Skydance’s merger with Warner Bros. Discovery. They argue that the deal violates antitrust laws by giving the combined company undue power in three markets: wide-release theatrical distribution, tent-pole movies, and basic cable television.
Paramount said the lawsuit “perverts established antitrust law” and that the company will fight the lawsuit “vigorously.” Late Monday, the states filed a motion seeking a temporary restraining order halting the proposed merger between Paramount and WBD pending the outcome of the antitrust case. Separately, the WGA filed a lawsuit Tuesday seeking to block Paramount’s contract with Warner Bros., arguing that it would cut writers’ pay and limit their employment opportunities.
So is the state auditing firm suing? Could that result in Paramount having to make certain guarantees or concessions to get a deal done with Warner Bros.?
The complaint alleges that Paramount and WBD’s monopoly size amounts to approximately 30% (or less) in each of the three markets, the minimum standard historically required to win an argument that such consolidation harms market participants.
Sam Weinstein, a Cardozo School of Law professor and former Justice Department antitrust lawyer, said on its face the state agency’s case is strong. “This is not a frivolous claim. If they can support their claims, this is a strong case,” he said, adding that it remains to be seen what evidence the states will present to support their claims.
Eric Talley, a professor at Columbia University School of Law, said on the Daily Variety podcast that the lawsuit is “on its face plausible, but it fits very well into a lot of similar claims that have been filed in the media industry and elsewhere.”
You can listen to the entire “Daily Variety” podcast episode here
“So I think this is an obstacle that Paramount Skydance and David Ellison and Warner Bros. Discovery have to deal with,” Talley said. “And that could play a significant role in sort of a delay, if not a knee-jerk role, with respect to this deal.”
State attorneys general, including California’s Rob Bonta, also sued to block Nexstar’s acquisition of rival TV station group Tegna, and this spring won a court injunction preventing the companies from continuing to merge. “In recent years, a memo appears to have slipped into the files stating that state attorneys general have the same authority as the federal government to challenge mergers under the Clayton Act,” Talley said.
Historically, it is unusual for states to take the lead in antitrust enforcement actions. Weinstein noted that typically there would be a joint state and federal lawsuit, led by the Justice Department. But after the Trump administration’s Justice Department unconditionally approved the Paramount-Warner Bros. deal (reportedly over the objections of the department’s career antitrust lawyers), “states felt they had to act on their own,” Weinstein said.
Talley said he believes the AGs will be successful in getting the court to at least temporarily halt Paramount and WBD from completing the deal “until some more work is done on the discovery portion of this case.” He added that if settlement talks were to take place, Paramount could make some concessions, which could take any form.
But some legal experts say it’s unclear whether the states will prevail.
“We don’t know 100% whether this will be successful,” Shubha Ghosh, a law professor at Syracuse University, told Variety. He said courts have generally respected the progress of full mergers. Additionally, a judge may decide that the AG’s lawsuit is too narrow on the market in question. The court’s analysis is likely to consider factors such as streaming and AI and how they affect the competitive dynamics of the industry.
Entertainment content is being distributed “not just in movie theaters and basic cable,” but also on YouTube and other streaming platforms, Ghosh said. “The courts might push back and say there’s still competition.”
Some believe the states will have a tough fight. “Due to the nature of the movie business, this case is built around the flexible and highly controversial metrics of market share and market power when it comes to distribution,” said Reuben Miller, head of antitrust at DealReporter, an M&A news and data firm. He said the lawsuit also does little to claim that Paramount’s cable TV channels, which include MTV, Nick and Comedy Central, are “must-have” programming.
The state AG’s lawsuit does not focus on the highly competitive streaming market, in which Paramount and WBD together do not have a dominant share. Paramount points out that the combined U.S. market share of its Paramount+ subscription streamer and WBD’s HBO Max is 10.8% (as of December 2025), far behind Netflix (32.5%), Disney (16.7%) and Amazon (15.3%).
Jennifer Huddleston, senior technology policy fellow at the Cato Institute think tank, said streaming platforms are increasingly competing with a variety of other entertainment options. That competition includes not only traditional cable TV and movie theaters, but also user-generated content such as short-form videos on TikTok and Instagram Reels, and long-form videos on YouTube, Huddleston said. “Any challenge should focus on the impact on consumer welfare, not favoring a particular competitor or less successful element of the market.”
The success of this case will depend on whether the judges hearing the case are persuaded that Paramount Warner Bros. has anticompetitive control over the identified markets. The decision was assigned to Judge Araceli Martinez Holguin of the U.S. District Court for the Northern District of California, a Biden appointee who previously worked for the ACLU and the National Immigration Law Center. Martinez-Holguin is the judge hearing a lawsuit brought by Paramount+ subscribers who say they face higher rates and fewer viewing options as a result of the Warner Bros. merger.
Mr. Weinstein cautioned against reading too much into cases handled by judges seen as having political leanings. “All things being equal, judges in antitrust cases tend to be more apolitical than, say, judges in civil rights cases,” he said.
Columbia’s Tully noted that Paramount has committed to paying shareholders a 25 cents-per-share “ticking fee” for each quarter that does not close after Sept. 30. This equates to approximately $650 million in cash value each quarter. “September happens before the election happens in November,” he said on the Daily Variety podcast. “So I think it’s very likely that we’re going to continue to see a bit of a postponement, at least until the November election.”
In some ways, the states’ antitrust cases are “proxy wars for the larger issues that are brewing,” Talley said. One question that is “very hard to ignore at this point” is how the federal government interacts with and controls the media.
Paramount and CBS are “moving in a certain direction,” he said. “Many of the Warner Bros. discovery assets, particularly CNN, are not moving in the same direction. So whether you summarize this as an antitrust battle or a battle for the cultural hearts and minds of the American people and the people of the state, on some level this will almost certainly play at least a subtextual role in the antitrust case as well.”
