California leads antitrust lawsuit seeking to stop Paramount-Warner Bros. Discovery deal

California’s attorney general is leading a coalition of 12 states in a lawsuit seeking to block Paramount’s proposed acquisition of Warner Bros. Discovery on antitrust grounds.

“An independent Warner Bros. limits Paramount’s bargaining leverage,” the lawsuit reads. “The merger will end this competition permanently. The likely result is higher prices, lower quality, and less content for film. Diminished competition will also harm distributors of cable television programming and consumers. These harms will be felt throughout the country, including in Plaintiff States.”

A combined Paramount-Warner Bros. would include two of Hollywood’s “Big Five” film studios — Paramount Pictures and Warner Bros. Motion Picture Group — along with DC Studios, roughly 50 basic cable channels (including Paramount Network, Comedy Central, TBS, and TNT), premium networks HBO and Showtime, and streaming services Paramount+, HBO Max, and Discovery+.

These combinations are central to the states’ antitrust argument. In each of these areas, the lawsuit argues that consumers would be harmed by reduced competition. According to the lawsuit, the combined film studios would have greater negotiating leverage with movie theaters, which the states argue could ultimately lead to higher ticket prices for consumers.

On the other side, the combined cable networks would give the company greater leverage over cable operators and streaming TV distributors such as YouTube TV, allowing it to demand higher carriage fees, according to the lawsuit.

The timing of the suit will be key for all involved. Paramount and Warner Bros. recently pushed back the earliest date the sale could close from July 16 to July 22. However, the more important date for the sale is September 30. If the deal does not close by then, Paramount will be forced to pay Warner Bros. Discovery shareholders a daily “ticking fee” to the tune of about $7 million per day (or $0.25 per share).

These 12 states may not be the only obstacle facing the sale. Regulators in the United Kingdom have also indicated that they may be ready to step in to slow down or stop the sale.

Most importantly for Awful Announcing readers, until the deal navigates these legal issues, TNT Sports and CBS Sports will remain separate. That means more time before any hypothetical collaboration, like TNT’s NHL games airing on CBS.