California weighs legal challenge to Paramount-Warner Bros merger

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California and Paramount-Warner merger

Highlights

California Attorney General Rob Bonta may soon decide whether to sue to block the Paramount-Warner Bros merger over antitrust concerns as regulatory deadlines approach.
Hollywood actors, theater owners, and workers warn the merger could hurt competition, lower wages, raise prices, and reduce consumer choice, intensifying political and regulatory scrutiny.
California is expanding its antitrust enforcement division with eight new attorneys, eight support staff, and a proposed $14.3 million budget increase as multiple states weigh joint legal action.

Regulatory review nears a critical point

As reported by Reuters, California Attorney General Rob Bonta says he will soon decide whether to sue to block the transaction, while his office reviews whether the merger violates U.S. antitrust law.

Bonta says there is little time left before the state would need to act, if it chooses to do so. European antitrust authorities are set to decide by early July whether to clear the deal, while the U.S. Department of Justice is also likely to reach a decision soon, according to a source familiar with the matter.

The proposed tie-up of two major U.S. film studios is drawing concern from movie theater owners, Hollywood actors and other industry participants, who argue it could reduce competition, lower wages, raise prices and limit choices for consumers and content buyers. Bonta says his office has heard from many workers in the industry and that those concerns are raising additional red flags.

He also indicates that promises by companies to change behavior are not always enough to address competition concerns. In his view, such commitments are stronger when backed by potential structural remedies, including divestitures if needed.

Hollywood jobs and state enforcement capacity

Bonta says California sees itself as playing a central role in protecting jobs in Hollywood as the Paramount-Warner Bros proposed merger advances. Antitrust enforcers can challenge mergers that significantly harm competition, including competition among employers for specialized labor.

Paramount rejects the argument that the deal would reduce output. A company spokesperson says Paramount has every economic incentive to expand production after the merger to grow streaming subscriptions, and Chief Executive David Ellison has pledged the combined company will release 30 movies a year in theaters. Paramount also says in court papers that theatrical releases are a key part of marketing its streaming business.

Chief Legal Officer Makan Delrahim says the company is prepared to remedy legitimate and articulated antitrust violations, but believes this deal presents none. At the same time, California is expanding the resources it can deploy on antitrust enforcement, with Bonta saying the state has the country's largest antitrust division and is adding eight attorneys and eight support staff this year, while Governor Gavin Newsom proposes another $14.3 million for that work.

Other states are discussing a possible joint challenge with California, according to two people familiar with the matter, although there is no sign yet of a final agreement on strategy. Bonta says the full range of options remains available and fully resourced, even as he acknowledges that major antitrust lawsuits can cost tens of millions of dollars.

In our earlier coverage of Unilever’s planned merger of its food business with McCormick, we outlined how the proposed $40–66 billion deal is designed to reshape Unilever’s portfolio while returning capital to shareholders. The article also highlighted mixed technical signals for ULVR, with expectations of near-term consolidation as investors weigh restructuring progress and buyback-driven support.

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